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SOUTHERN TENNESSEE
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ASSET PURCHASE AGREEMENT
BY AND BETWEEN
AMERICAN CABLE TV INVESTORS 5, LTD.
AND
XXXXXX ACQUISITION PARTNERS, L.L.L.P.
DATED AS OF
NOVEMBER 29, 1996
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TABLE OF CONTENTS
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ARTICLE I.........................................................................................................1
1. Definitions..............................................................................................1
Accountants..............................................................................................1
Accounts Receivable......................................................................................1
Adjustment Time..........................................................................................1
Affiliate................................................................................................1
Alternative Transaction..................................................................................1
Assets...................................................................................................2
Assumed Liabilities......................................................................................2
Basic Services...........................................................................................2
Basic Subscriber Rate....................................................................................2
Best of Seller's Knowledge...............................................................................2
Business.................................................................................................2
Business Day.............................................................................................2
Buyer....................................................................................................2
Buyer Financial Statement................................................................................2
Buyer Interim Financial Statement........................................................................2
Cable Act................................................................................................2
Closing..................................................................................................3
Closing Date.............................................................................................3
Code.....................................................................................................3
Communications Act.......................................................................................3
Consents.................................................................................................3
Copyright Act............................................................................................3
Deposit..................................................................................................3
Employer.................................................................................................3
Employer Plans...........................................................................................3
Encumbrance..............................................................................................3
Environmental Law........................................................................................3
Equipment................................................................................................3
Equivalent Basic Subscribers.............................................................................4
ERISA....................................................................................................4
Escrow Agent.............................................................................................4
Escrow Agreement.........................................................................................4
Exchange Act.............................................................................................4
Excluded Assets..........................................................................................4
Excluded Liabilities.....................................................................................4
Exhibits.................................................................................................4
Extension................................................................................................5
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FCC......................................................................................................5
Final Adjustments Report.................................................................................5
Franchise Areas..........................................................................................5
Franchise Fee............................................................................................5
GAAP.....................................................................................................5
General Partner..........................................................................................5
Governmental Authority...................................................................................5
Governmental Permits.....................................................................................5
Hazardous Substances.....................................................................................5
Homes Passed.............................................................................................6
HSR Act..................................................................................................6
Indemnity Escrow Agent...................................................................................6
Indemnity Escrow Agreement...............................................................................6
Intangibles..............................................................................................6
IRS......................................................................................................6
Legal Requirement........................................................................................6
Limited Partners.........................................................................................6
Management Agreement.....................................................................................6
Must Carry Election......................................................................................6
1996 Financial Statements................................................................................7
Partnership Agreement....................................................................................7
Pay TV...................................................................................................7
Permitted Encumbrances...................................................................................7
Person...................................................................................................7
Preliminary Adjustments Report...........................................................................7
Prime Rate ..............................................................................................7
Purchase Price...........................................................................................7
Real Property............................................................................................7
Regulatory Requirement...................................................................................7
Required Consents........................................................................................7
Retransmission Consent Agreements........................................................................8
Schedules................................................................................................8
SEC......................................................................................................8
Securities Act...........................................................................................8
Seller...................................................................................................8
Seller Contracts.........................................................................................8
Seller's Escrow..........................................................................................8
Seller Financial Statements..............................................................................8
System...................................................................................................8
Taking...................................................................................................8
Tax Return ..............................................................................................8
Taxes....................................................................................................8
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TCI......................................................................................................8
Telecom Act..............................................................................................9
Termination Date.........................................................................................9
WARN Act.................................................................................................9
ARTICLE II........................................................................................................9
2. Purchase and Sale of Assets..............................................................................9
2.1 Purchase and Sale of Assets...................................................................9
2.2 Time and Place of Closing.....................................................................9
ARTICLE III......................................................................................................10
3. Consideration...........................................................................................10
3.1 Consideration for the Assets.................................................................10
3.2 Purchase Price Prorations....................................................................10
3.3 Purchase Price Adjustments...................................................................11
3.4 Preliminary and Final Settlements............................................................12
3.5 Disputed Liabilities.........................................................................14
3.6 Allocation of Purchase Price.................................................................14
ARTICLE IV.......................................................................................................14
4. Assumed Liabilities and Excluded Assets.................................................................14
4.1 Assignment and Assumption....................................................................14
4.2 Excluded Assets..............................................................................15
ARTICLE V........................................................................................................15
5. Representations and Warranties of Seller................................................................15
5.1 Organization and Qualification...............................................................15
5.2 Authority and Validity.......................................................................16
5.3 Consents and Approvals; No Violation.........................................................16
5.4 Complete Systems.............................................................................16
5.5 Title........................................................................................17
5.6 Real Property................................................................................17
5.7 Environmental Matters........................................................................17
5.8 Compliance with Law; Governmental Permits....................................................17
5.9 Seller Contracts.............................................................................18
5.10 Copyright Compliance.........................................................................18
5.11 Financial Statements.........................................................................19
5.12 Legal Proceedings............................................................................19
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5.13 Employment Matters...........................................................................19
5.14 System Information...........................................................................21
5.15 Finders and Brokers..........................................................................21
5.16 Tax Matters..................................................................................21
5.17 Condition of Assets..........................................................................21
5.18 Regulation of Rates..........................................................................21
5.19 Insurance....................................................................................21
5.20 No Other Commitment to Sell..................................................................21
ARTICLE VI.......................................................................................................22
6. Buyer's Representations and Warranties..................................................................22
6.1 Organization and Qualification...............................................................22
6.2 Authority and Validity.......................................................................22
6.3 No Breach or Violation.......................................................................22
6.4 Litigation...................................................................................23
6.5 Financial Statements.........................................................................23
6.6 Adequate Financing...........................................................................23
6.7 Finders and Brokers..........................................................................23
6.8 Qualification of Buyer.......................................................................24
ARTICLE VII......................................................................................................24
7. Additional Covenants....................................................................................24
7.1 Access to Premises and Records...............................................................24
7.2 Continuity and Maintenance of Operations; Financial Statements;
Correspondence...............................................................................24
7.3 Employee Matters.............................................................................26
7.4 Franchise Extension..........................................................................26
7.5 Environmental Report.........................................................................26
7.6 Consents.....................................................................................27
7.7 HSR Notification.............................................................................27
7.8 Notification of Certain Matters..............................................................28
7.9 Risk of Loss; Condemnation...................................................................28
7.10 Adverse Changes..............................................................................28
7.11 Action By Limited Partners...................................................................29
7.12 No Solicitation..............................................................................29
7.13 Sales and Transfer Taxes and Fees............................................................30
7.14 Commercially Reasonable Efforts..............................................................30
7.15 Title Insurance..............................................................................30
7.16 FCC Form 626.................................................................................31
7.17 Forms 394....................................................................................31
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ARTICLE VIII.....................................................................................................31
8. Conditions Precedent to Obligations of Buyer............................................................31
8.1 HSR Act......................................................................................31
8.2 Governmental or Legal Action.................................................................31
8.3 Accuracy of Representations and Warranties...................................................31
8.4 Performance of Agreements....................................................................31
8.5 No Material Adverse Change...................................................................32
8.6 Consents and Extensions......................................................................32
8.7 Transfer Documents...........................................................................32
8.8 Opinions of Seller's Counsel.................................................................32
8.9 Opinion of Seller's FCC Counsel..............................................................32
8.10 Discharge of Liens...........................................................................32
8.11 Noncompete Agreement.........................................................................32
8.12 Additional Documents and Acts................................................................32
8.13 Indemnity Escrow Agreement...................................................................33
8.14 1996 Financial Statements....................................................................33
8.15 Certificates.................................................................................33
ARTICLE IX.......................................................................................................33
9. Conditions Precedent to Obligations of Seller...........................................................33
9.1 HSR Act......................................................................................33
9.2 Governmental or Legal Actions................................................................33
9.3 Accuracy of Representations and Warranties...................................................33
9.4 Performance of Agreements....................................................................33
9.5 Consents.....................................................................................34
9.6 Opinions of Buyer's Counsel..................................................................34
9.7 Limited Partner Approval.....................................................................34
9.8 Payment of Purchase Price....................................................................34
9.9 Assumption of Liabilities....................................................................34
9.10 Additional Documents and Acts................................................................34
9.11 Certificate..................................................................................34
9.12 Fairness Opinion.............................................................................34
9.13 Indemnity Escrow Agreement...................................................................34
9.14 Environmental Remediation....................................................................34
ARTICLE X........................................................................................................35
10. Termination.............................................................................................35
10.1 Events of Termination........................................................................35
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10.2 Manner of Exercise...........................................................................37
10.3 Effect of Termination........................................................................37
10.4 Liquidated Damages...........................................................................37
ARTICLE XI.......................................................................................................38
11. Nature and Survival of Representations, Warranties and Agreements.......................................38
11.1 Nature of Representations, Warranties and Agreements.........................................38
11.2 Survival of Representations and Warranties...................................................38
11.3 Time Limitations.............................................................................38
11.4 Limitations as to Amount.....................................................................38
ARTICLE XII......................................................................................................39
12. Indemnification.........................................................................................39
12.1 Rights to Indemnification....................................................................39
12.2 Procedure for Indemnification................................................................39
12.3 Indemnity Escrow.............................................................................40
ARTICLE XIII.....................................................................................................40
13. Miscellaneous...........................................................................................40
13.1 Parties Obligated and Benefitted.............................................................40
13.2 Press Releases...............................................................................41
13.3 Notices......................................................................................41
13.4 Waiver.......................................................................................42
13.5 Captions.....................................................................................42
13.6 CHOICE OF LAW................................................................................42
13.7 Nonrecourse..................................................................................42
13.8 Dispute Resolution...........................................................................42
13.9 Power of Attorney............................................................................43
13.10 Terms........................................................................................43
13.11 Rights Cumulative............................................................................43
13.12 Further Actions..............................................................................43
13.13 Time.........................................................................................43
13.14 Expenses.....................................................................................43
13.15 Specific Performance.........................................................................43
13.16 Schedules....................................................................................44
13.17 Counterparts.................................................................................44
13.18 Entire Agreement.............................................................................44
13.19 Severability.................................................................................44
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EXHIBITS
Exhibit A Geographic Areas of Seller's Business
Exhibit B Escrow Agreement
Exhibit C Form of Engagement Letter
Exhibit D Form for Opinion of Seller's Counsel
Exhibit E Form for Opinion of Buyer's Counsel
Exhibit F Form of Indemnity Escrow Agreement
Exhibit G Form of Opinion of Seller's FCC Counsel
Exhibit H Form of Noncompetition Agreement
SCHEDULES
Schedule 1.1 Subscriber Rates
Schedule 1.2 Consents
Schedule 1.3 Equipment
Schedule 1.4 Franchise Areas
Schedule 1.5 Governmental Permits
Schedule 1.6 Permitted Encumbrances
Schedule 1.7 Real Property
Schedule 1.8 Seller Contracts
Schedule 1.9 System
Schedule 4.2 Excluded Assets
Schedule 5.3(b) Violations of Partnership Agreement and Legal Requirements
Schedule 5.4 Complete Systems
Schedule 5.5 Encumbrances on Seller's Title
Schedule 5.7 Environmental
Schedule 5.8 Compliance with Law
Schedule 5.12 Legal Proceedings
Schedule 5.13(c) Employment Matters
Schedule 5.13(d) Employees
Schedule 5.13(e) Employer Plans
Schedule 5.14 System Information
Schedule 5.16 Taxes
Schedule 6.3(a) Consents to be Obtained or Waived by Closing Date
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("AGREEMENT") is made as of the
29th day of November, 1996, by and between AMERICAN CABLE TV INVESTORS 5, LTD.,
a Colorado limited partnership ("SELLER"), and XXXXXX ACQUISITION PARTNERS,
L.L.L.P., a Colorado limited liability limited partnership ("BUYER").
R E C I T A L S:
A. Seller is engaged in the business of providing cable
television service to subscribers in and around the geographic areas set forth
on Exhibit A.
B. Buyer desires to purchase and Seller desires to sell the
assets of Seller designated in this Agreement used or held for use in connection
with that business, upon the terms and subject to the conditions set forth in
this Agreement.
Accordingly, the parties agree as follows:
ARTICLE I
1. DEFINITIONS.
"ACCOUNTANTS" shall have the meaning set forth in Section
3.4(d).
"ACCOUNTS RECEIVABLE" shall mean all accounts receivable of
Seller representing amounts earned by Seller in connection with its operation of
the Business through the Adjustment Time.
"ADJUSTMENT TIME" shall have the meaning set forth in Section
3.2.
"AFFILIATE" shall mean, with respect to any Person, any other
Person controlling, controlled by or under common control with such Person, with
"control" for such purpose meaning the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or voting interests,
by contract or otherwise.
"ALTERNATIVE TRANSACTION" shall mean any transaction which
could result in the transfer of control over, or ownership of, all or
substantially all the Assets, including (a) any merger or consolidation of
Seller in which another Person or group of Persons acquires 50% or more of the
partnership interests in Seller or the equity interests of the surviving entity,
as the case may be, (b) any tender offer or exchange offer for partnership
interests in Seller which, if
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consummated, would result in a Person or group of Persons (other than the
existing partners in such entities as of the date of this Agreement) owning 50%
or more of the partnership interests in Seller or (c) any sale or other
disposition of all or substantially all the Assets.
"ASSETS" shall mean all properties, privileges, rights,
interests and claims, real and personal, tangible and intangible, of every type
and description that are owned, leased, used or held for use in the Business in
which Seller has any right, title or interest or in which Seller acquires any
right, title or interest on or before the Closing Date, including Accounts
Receivable, Governmental Permits, Intangibles, Seller Contracts, Equipment and
Real Property but excluding any Excluded Assets and any Assets disposed of by
Seller in the ordinary course of business prior to the Closing Date.
"ASSUMED LIABILITIES" shall have the meaning set forth in
Section 4.1.
"BASIC SERVICES" shall mean the lowest tier of cable
television programming sold to subscribers of the System for which a subscriber
served by the System pays a fixed monthly fee to Seller, excluding Expanded
Basic Services, Pay TV and any charges for additional outlets and installation
fees and revenues derived from the rental of converters, remote control devices
and other like charges for equipment.
"BASIC SUBSCRIBER RATE" shall mean, for the System, the
predominant monthly fees and charges derived from the provision of Basic
Services to single family households, as of June 30, 1996, as set forth on
SCHEDULE 1.1.
"BEST OF SELLER'S KNOWLEDGE" shall mean the actual knowledge
of Xxxxxx Xxxxx, Xxxxxx Xxxxxxx, Xxxx Xxxxxx, Xxxxxxx Xxxxxxx and Xxxxx Xxxxxx.
"BUSINESS" shall mean the cable television business conducted
by Seller on the date of this Agreement through the System in and around the
Franchise Areas.
"BUSINESS DAY" shall mean any day other than Saturday, Sunday
or a day on which banking institutions in Denver, Colorado or New York, New York
are required or authorized to be closed.
"BUYER" shall mean the Person identified as such in the
preamble to this Agreement.
"BUYER FINANCIAL STATEMENT" shall have the meaning set forth
in Section 6.5.
"BUYER INTERIM FINANCIAL STATEMENT" shall have the meaning set
forth in Section 6.5.
"CABLE ACT" shall have the meaning set forth in Section 5.8.
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"CLOSING" shall mean the consummation of the transactions
contemplated by this Agreement, as described in Article II.
"CLOSING DATE" shall mean the date on which the Closing
occurs.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"COMMUNICATIONS ACT" shall have the meaning set forth in
Section 5.8(c).
"CONSENTS" shall mean any registration with, consent or
approval of, notice to, or action by any Person or Governmental Authority
required to permit the transfer of the Assets to Buyer or permit Seller to
perform any of its other obligations under this Agreement, all of which are set
forth on SCHEDULE 1.2.
"COPYRIGHT ACT" shall mean Title 17 of the United States Code,
as amended, and all rules and regulations thereunder.
"DEPOSIT" shall have the meaning set forth in Section 3.1.
"EMPLOYER" shall have the meaning set forth in Section
5.13(a).
"EMPLOYER PLANS" shall have the meaning set forth in Section
5.13(e).
"ENCUMBRANCE" shall mean any mortgage, lien, security
interest, security agreement, conditional sale or other title retention
agreement, limitation, pledge, option, charge, assessment, restrictive
agreement, restriction, encumbrance, adverse interest, restriction on transfer
or any exception to or defect in title or other ownership interest (including
reservations, rights of way, possibilities of reverter, encroachments,
easements, rights of entry, restrictive covenants, leases and licenses).
"ENVIRONMENTAL LAW" shall mean any Legal Requirement relating
to pollution or protection of public health, safety or welfare or the
environment, including those relating to emissions, discharges, releases or
threatened releases of Hazardous Substances into the environment (including
ambient air, surface water, ground water or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances.
"EQUIPMENT" shall mean all electronic devices, trunk and
distribution coaxial and optical fiber cable, amplifiers, power supplies,
conduit, vaults and pedestals, grounding and pole hardware, subscriber's devices
(including converters, encoders, transformers behind television sets and
fittings), headend hardware (including origination, earth stations, transmission
and distribution system), test equipment, vehicles and other tangible personal
property owned, leased, used or held for use by Seller in connection with the
Business, including the items described on SCHEDULE 1.3.
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"EQUIVALENT BASIC SUBSCRIBERS" shall mean, with respect to
each Franchise Area, as of any date, the number of active customers for Basic
Services either in a single household, a commercial establishment or a
multi-unit dwelling (including a hotel unit); provided, however, that the number
of customers in a commercial establishment or multi-unit dwelling that obtain
service on a "bulk-rate" basis shall be determined for each Franchise Area by
dividing the gross bulk-rate xxxxxxxx for Basic Services and Expanded Basic
Services (but excluding xxxxxxxx from a la carte tiers or premium services,
installation or other non-recurring charges, converter rental or any outlet or
connection other than the first outlet or connection, pass-through charges for
sales taxes, line-itemized franchise fees, fees charged by the FCC and the like)
attributable to such commercial establishment or multi-unit dwelling during the
most recent billing period ended prior to the date of calculation (but excluding
xxxxxxxx in excess of a single month's charge) by the rate charged at the date
of determination to individual households for the highest level of Basic
Services and Expanded Basic Services offered in the Franchise Area, such rate
not to be less than the rate for such Franchise Area set forth on SCHEDULE 1.1
(excluding xxxxxxxx from a la carte tiers or premium services, installation or
other non-recurring charges, converter rental, pass-through charges for sales
taxes, line-itemized franchise fees, fees charged by the FCC and the like). For
purposes of this definition, (i) an "active customer" shall mean, as of any
date, any person, commercial establishment or multi-unit dwelling that is paying
for and receiving Basic Services from the System in that Franchise Area who has
an account that is not more than 60 days past due (except for past due amounts
of $10.00 or less, provided such account is otherwise current) but excluding any
person, commercial establishment or multi-unit dwelling that as of the date of
calculation has not paid in full the charges for at least two months of the
services ordered and (ii) the number of days a customer account is past due
shall be calculated from the first day of the period for which the applicable
billing relates.
"ERISA" shall have the meaning set forth in Section 5.13(b).
"ESCROW AGENT" shall have the meaning set forth in Section
3.1.
"ESCROW AGREEMENT" shall have the meaning set forth in Section
3.1.
"EXCHANGE ACT" shall mean the Securities and Exchange Act of
1934, as amended.
"EXCLUDED ASSETS" shall have the meaning set forth in Section
4.2.
"EXCLUDED LIABILITIES" shall have the meaning set forth in
Section 4.1(b).
"EXHIBITS" shall mean the exhibits prepared and delivered
pursuant to this Agreement.
"EXPANDED BASIC SERVICES" shall mean any video programming
provided over the System, regardless of service tier, other than Basic Services,
any new product tier and video programming offered on a per channel or per
program basis, for which a subscriber served by the
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System pays a fixed monthly fee to Seller, excluding Pay TV and any charges for
additional outlets and installation fees and revenues derived from the rental of
converters, remote control devices and other like charges for equipment.
"EXTENSION" shall have the meaning set forth in Section 7.4.
"FCC" shall have the meaning set forth in Section 5.8(c).
"FINAL ADJUSTMENTS REPORT" shall have the meaning set forth in
Section 3.4(b).
"FRANCHISE AREAS" shall mean those areas in which Seller is
authorized under one or more Governmental Permits issued by the applicable
franchising authorities to provide cable television service to subscribers
located in such areas through the ownership and operation of the System, as set
forth on SCHEDULE 1.4.
"FRANCHISE FEE" shall mean the percentage of Seller's gross
revenues to be paid to a Governmental Authority as specified in the applicable
franchise agreement.
"GAAP" shall mean generally accepted accounting principles as
in effect in the United States of America on the date of this Agreement.
"GENERAL PARTNER" shall mean IR-TCI Partners V, L.P., the
general partner of Seller.
"GOVERNMENTAL AUTHORITY" shall mean any of the following: (a)
the United States of America; (b) any state, commonwealth, territory or
possession of the United States of America and any political subdivision thereof
(including counties, municipalities and the like); or (c) any agency, authority
or instrumentality of any of the foregoing, including any court, tribunal,
department, bureau, commission or board.
"GOVERNMENTAL PERMITS" shall mean all franchises,
authorizations, permits, licenses, easements, registrations, leases, variances
and similar rights obtained from any Governmental Authority which authorize or
are required in connection with the operation of the Business, including those
described on SCHEDULE 1.5.
"HAZARDOUS SUBSTANCES" shall mean any pollutant, contaminant,
chemical, industrial, toxic, hazardous or noxious substance or waste which is
regulated by any Governmental Authority, including (a) any petroleum or
petroleum compounds (refined or crude), flammable substances, explosives,
radioactive materials or any other materials or pollutants which pose a hazard
or potential hazard to the Real Property or to Persons in or about the Real
Property or cause the Real Property to be in violation of any laws, regulations
or ordinances of federal, state or applicable local governments, (b) asbestos or
any asbestos-containing material of any kind or character, (c) polychlorinated
biphenyls ("PCBs"), as regulated by the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., (d) any materials or
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substances designated as "hazardous substances" pursuant to the Clean Water Act,
33 U.S.C. Section 1251 et seq., (e) "economic poison," as defined in the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 135 et seq., (f)
"chemical substance," "new chemical substance" or "hazardous chemical substance
or mixture" pursuant to the Toxic Substances Control Act, referred to above, (g)
"hazardous substances" pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq. and (h)
"hazardous waste" pursuant to the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq.
"HOMES PASSED" shall mean, with respect to the System and as
of June 30, 1996, the total of (a) the number of single family residences
capable of being serviced without further line construction, (b) the number of
units in multi-family residential buildings capable of being serviced without
further line construction and not then governed by bulk-service agreements and
(c) the number of bulk service agreements regardless of the number of units
serviced or the equivalent billing units.
"HSR ACT" shall have the meaning set forth in Section 7.6.
"INDEMNITY ESCROW AGENT" shall mean The Chase Manhattan Bank.
"INDEMNITY ESCROW AGREEMENT" shall mean the Indemnity Escrow
Agreement to be entered into at Closing among Buyer, Seller and the Indemnity
Escrow Agent, in the form attached as Exhibit F.
"INTANGIBLES" shall mean all general intangibles, including
subscriber lists, claims (excluding any claims relating to Excluded Assets),
patents, copyrights and goodwill, if any, owned, used or held for use by Seller
in connection with the Business.
"IRS" shall mean the Internal Revenue Service.
"LEGAL REQUIREMENT" shall mean any statute, ordinance, code,
law, rule, regulation, order or other requirement, standard or procedure
enacted, adopted or applied by any Governmental Authority, including judicial
decisions applying common law or interpreting any other Legal Requirement.
"LIMITED PARTNERS" shall mean the Persons who own or hold
units of limited partnership interests in Seller.
"MANAGEMENT AGREEMENT" shall mean the agreement related to the
operation of the System and the other cable systems owned by Seller between
Seller and TCI Cablevision Associates, Inc. (formerly known as Xxxxxxx &
Associates, Inc.).
"MUST CARRY ELECTION" shall mean the exercise by WXMT of its
must carry rights pursuant to Section 4 of the Cable Act.
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"1996 FINANCIAL STATEMENTS" shall have the meaning set forth
in Section 7.2.
"PARTNERSHIP AGREEMENT" shall mean the Amended and Restated
Limited Partnership Agreement of Seller, dated as of January 1, 1987, by and
between IR-TCI Partners V, L.P. (formerly known as IR-Xxxxxxx Partners V, L.P.),
as the general partner, and Xxxxx X. Xxxxx, as the initial limited partner.
"PAY TV" shall mean premium programming services selected by
and sold to subscribers of the System for monthly fees in addition to the fee
for Basic Services.
"PERMITTED ENCUMBRANCES" shall mean the following: (a) liens
for taxes, assessments and governmental charges not yet due and payable; (b)
zoning laws and ordinances and similar Legal Requirements; (c) rights reserved
to any Governmental Authority to regulate the affected property; (d) as to
leased Assets, interests of lessors and Encumbrances affecting the interests of
the lessors; (e) the Encumbrances described on SCHEDULE 1.6; and (f) any liens,
easements, rights-of-way, servitudes, permits, leases, restrictions and
imperfections or irregularities in title that do not in any material respect,
individually or in the aggregate, affect or impair the value or use of the
affected Asset as it is currently being used by Seller.
"PERSON" shall mean any natural person, corporation,
partnership, trust, unincorporated organization, association, limited liability
company, Governmental Authority or other entity.
"PRELIMINARY ADJUSTMENTS REPORT" shall have the meaning set
forth in Section 3.4(a).
"PRIME RATE" shall mean the rate of interest quoted from time
to time in The Wall Street Journal as the prime rate.
"PURCHASE PRICE" shall have the meaning set forth in Section
3.1.
"REAL PROPERTY" shall mean all Assets consisting of interests
in real property (including, to the extent applicable, improvements, fixtures
and appurtenances), including the fee and leasehold interests described on
SCHEDULE 1.7.
"REGULATORY REQUIREMENT" shall mean any filing required
pursuant to the Securities Act, the Exchange Act, the HSR Act, state securities
laws (including, but not limited to, state "blue sky" laws) and state corporate
laws (including, but not limited to, takeover statutes).
"REQUIRED CONSENTS" shall mean the Consents designated as such
on SCHEDULE 1.2 by an asterisk.
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"RETRANSMISSION CONSENT AGREEMENTS" shall mean the
retransmission consent agreements with respect to the carriage of broadcast
television signals between TCI Cable Management and each of WSMV and WTVF.
"SCHEDULES" shall mean the schedules prepared and delivered
pursuant to this Agreement.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SELLER" shall mean the Person indicated as such in the
preamble to this Agreement.
"SELLER CONTRACTS" shall mean all contracts, agreements and
leases, other than those that are Governmental Permits, to which Seller is a
party and pertain to the ownership, operation or maintenance of the Assets or
the Business, including those described on Schedule 1.8.
"SELLER'S ESCROW" shall have the meaning set forth in Section
3.1.
"SELLER FINANCIAL STATEMENTS" shall have the meaning set forth
in Section 5.11.
"SYSTEM" shall mean a cable television reception and
distribution system operated in the conduct of the Business, consisting of one
or more headends, subscriber drops and associated electronic and other
equipment, and which is, or is capable of being without modification, operated
as an independent system without interconnections to other systems as set forth
on SCHEDULE 1.9.
"TAKING" shall have the meaning set forth in Section 7.7(b).
"TAX RETURN" shall mean any return, report, information return
or other document (including any related or supporting information) filed or
required to be filed with any taxing authority in connection with the
determination, assessment, collection, administration or imposition of any
Taxes.
"TAXES" shall mean all taxes, charges, fees, liens, imposts,
duties or other assessments including, but not limited to, income, withholding,
excise, employment, property, sales, franchise, use and gross receipt taxes,
imposed by the United States or any state, county, local or foreign government
or any subdivision thereof. Such term shall also include any interest, penalties
or additions attributable to such assessments.
"TCI" shall mean TCI Communications, Inc., a Delaware
corporation.
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"TELECOM ACT" shall have the meaning set forth in Section
5.8(e).
"TERMINATION DATE" shall mean June 27, 1997; provided,
however, Seller and Buyer shall each have the right, upon five days notice to
the other, to extend the Termination Date to a date designated in such notice,
which date shall in no event be later than August 26, 1997; provided further,
Seller shall have the right, upon five days notice to Buyer, to further extend
the Termination Date to a date designated in such notice, which date shall in no
event be later than November 24, 1997.
"WARN ACT" shall mean the Worker Adjustment and Retraining
Notification Act.
ARTICLE II
2. PURCHASE AND SALE OF ASSETS.
2.1 PURCHASE AND SALE OF ASSETS. Subject to the satisfaction
of the conditions to each party's obligations set forth in Articles VIII and IX
(or, with respect to any condition not satisfied, the waiver thereof by the
party or parties for whose benefit the condition exists), Seller shall sell,
assign, transfer and deliver to Buyer all of Seller's right, title and interest
in, and Buyer shall purchase, acquire, accept and pay for, the Assets free and
clear of and expressly excluding all debts, liabilities, obligations, taxes,
liens and encumbrances (other than Permitted Encumbrances) of any kind,
character or description, whether accrued, absolute, contingent or otherwise
(and whether or not reflected or reserved against in the balance sheets, books
of account and records of the Seller), except as otherwise expressly provided in
Section 4.1 hereof.
2.2 TIME AND PLACE OF CLOSING. Subject to the terms and
conditions of this Agreement, the Closing shall take place at 10:00 a.m. New
York City time on a date specified by notice (the "CLOSING NOTICE") from Seller
to Buyer (but shall not in any event be prior to the satisfaction or waiver of
the conditions to Closing as set forth in Articles VIII and IX), in New York,
New York at the offices of Xxxx, Scholer, Fierman, Xxxx & Handler, LLP, or at
such other time or place as the parties may agree; provided, however, the date
specified in the Closing Notice shall not be less than 10 nor more than 30 days
after the date the Closing Notice is given; provided, further that if the
Termination Date would otherwise occur within such 10-day period, the
Termination Date shall be extended to the date which is 10 days after the date
the Closing Notice is given (or the next Business Day if such date is not a
Business Day).
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ARTICLE III
3. CONSIDERATION.
3.1 CONSIDERATION FOR THE ASSETS. The aggregate consideration
for the Assets shall consist of (i) an amount equal to $19,750,000, subject to
proration as set forth in Section 3.2 and adjustment as set forth in Section 3.3
(the "PURCHASE PRICE") and (ii) the assumption by Buyer of the Assumed
Liabilities. The Purchase Price shall be payable as follows: (a) $493,750 (such
amount, as increased by any earnings thereon and as reduced by any disbursements
or losses on investments, the "DEPOSIT"), payable concurrently with the
execution and delivery of this Agreement in cash by means of wire or interbank
transfer in immediately available funds to the trust account of Xxxx, Scholer,
Fierman, Xxxx & Handler, LLP (the "ESCROW AGENT"), to be held, administered and
distributed for the respective benefits of the parties hereto in accordance with
the terms of this Agreement and the Escrow Agreement among Seller, Buyer and the
Escrow Agent dated the date of this Agreement (the "ESCROW AGREEMENT") in the
form set forth as Exhibit B attached hereto and (b) $19,750,000 payable by Buyer
to Seller, or Seller's designee, at Closing in cash by means of wire or
interbank transfer in immediately available funds, reduced by the amount, if
any, of the Deposit actually released to Seller, or Seller's designee. At
Closing, Seller and Buyer shall direct the Escrow Agent to release the Deposit
to Seller, or Seller's designee, in accordance with the terms of the Escrow
Agreement. Simultaneously with the payment of the Purchase Price, Seller shall
deposit $493,750 (such amount, as increased by any earnings thereon and as
reduced by any disbursements or losses on investments, "SELLER'S ESCROW") in
cash by means of wire or interbank transfer of immediately available funds to
the account of the Indemnity Escrow Agent, to be held, administered, and
distributed in accordance with the terms of this Agreement and the Indemnity
Escrow Agreement.
3.2 PURCHASE PRICE PRORATIONS. (a) All revenues (other than
Accounts Receivable being purchased by Buyer hereunder) and all expenses arising
from the operations of the Business up until 12:01 a.m. on the Closing Date (the
"ADJUSTMENT TIME"), including, but not limited to, pole rental fees, rental or
other charges payable in respect of the Seller Contracts, sales and use taxes
payable with respect to cable television service and equipment, which shall not
include sales or use taxes arising out of the consummation of the transaction
contemplated hereunder, power and utility charges, real and personal property
taxes and assessments levied against the Assets, applicable franchise, copyright
or other fees, sales and service charges, wages, payroll taxes and payroll
expenses (including accrued vacation pay except to the extent a Purchase Price
adjustment in Buyer's favor is made under Section 3.3) of employees of Employer
who primarily perform services in connection with the operation of the Business
who are employed by Buyer as of the Closing, and other prepaid and deferred
items shall be prorated between Buyer and Seller as of the Adjustment Time in
accordance with GAAP and the principle that Seller shall receive all revenues
(other than Accounts Receivable being purchased by Buyer hereunder) and shall be
responsible for all expenses, costs and liabilities allocable to the period
prior to the Adjustment Time and Buyer shall receive all revenues and shall be
responsible for all expenses, costs and liabilities allocable to the period
after the Adjustment Time.
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(b) The amount of each item of revenue prorated
under subsection (a) above, to a party which has not received, and under the
terms of this Agreement will not receive, such revenue shall be deemed a charge
against the other party. The amount of any item of cost or expense prorated
under subsection (a) above to a party which has not paid, and under the terms of
this Agreement will not pay, such cost or expense shall be deemed a charge
against such party. If the aggregate charges allocated to Seller as set forth in
this Section 3.2(b) exceed the aggregate charges allocated to Buyer as set forth
in this Section 3.2(b), the Purchase Price shall be decreased by an amount equal
to the difference between the aggregate charges allocated to Seller and the
aggregate charges allocated to Buyer. If the aggregate charges allocated to
Buyer as set forth in this Section 3.2(b) exceed the aggregate charges allocated
to Seller as set forth in this Section 3.2(b), the Purchase Price shall be
increased by an amount equal to the difference between the aggregate charges
allocated to Buyer and the aggregate charges allocated to Seller.
3.3 PURCHASE PRICE ADJUSTMENTS. (a) The Purchase Price shall
be increased by an amount equal to the aggregate of the following:
(i) (a) 95% of the face amount of all Accounts
Receivable which, as of the Adjustment Time, are outstanding for a period of not
more than 30 days after their respective invoice dates and (b) 85% of the face
amount of all Accounts Receivable which, as of the Adjustment Time, are
outstanding for a period of more than 30 days but not more than 60 days after
their respective invoice dates; and
(ii) to the extent not included in the
prorations to the Purchase Price as set forth in Section 3.2, the dollar amount
of all advance payments to, or deposits with, third parties relating to the
Business which, as of the Closing Date, are for the account of Seller or are
security for Seller's performance of its obligations under any agreement
relating to the Business or any Assets, including, but not limited to, deposits
made with lessors and deposits for utilities.
(b) The Purchase Price shall be decreased by an
amount equal to the aggregate of the following:
(i) the dollar amount of the remaining balance, as
of the Closing Date, of all advance payments to, or monies of third parties on
deposit with, Seller relating to the Business, including advance payments and
deposits by customers served by the Business for converters, encoders, decoders,
cable service and related sales;
(ii) the dollar amount of accrued vacation pay of
employees of Employer identified on Schedule 5.13(d) who are employed by Buyer
as of the Closing;
(iii) if, as of the Closing Date, the aggregate
number of Equivalent Basic Subscribers served by the System is less than 11,500,
an amount equal to (x) the difference between 11,500 and the aggregate number of
Equivalent Basic Subscribers served by the System as of the Closing Date times
(y) $1,717; and
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(iv) 100% of the dollar amount of any deductibles
paid, or to be paid, under insurance policies for which insurance proceeds are
payable to Buyer pursuant to Section 7.9(a).
(c) If the Purchase Price is decreased pursuant to
Section 3.3(b)(iii), Seller shall deliver to Buyer at Closing a list of each of
the System's subscribers who, as of the Closing Date, have not qualified as an
Equivalent Basic Subscriber because they have not paid in full at least two
months of the services ordered. The Purchase Price shall be increased by an
amount equal to (x) the number of subscribers on such list who, as of the date
which corresponds to the Closing Date for the month following the month during
which the Closing occurs, qualify as Equivalent Basic Subscribers, times (y)
$1,717; provided, that, the amount by which the Purchase Price is increased
pursuant to this Section 3.3(c) shall not exceed the amount by which the
Purchase Price is decreased pursuant to Section 3.3(b)(iii). Any increase to the
Purchase Price pursuant to this Section 3.3(c) shall be reflected as an
adjustment to the Purchase Price on the Final Adjustments Report.
3.4 PRELIMINARY AND FINAL SETTLEMENTS. Preliminary and final
adjustments to the Purchase Price will be determined as follows:
(a) At least five Business Days prior to the
Closing Date, Seller will deliver to Buyer a report (the "PRELIMINARY
ADJUSTMENTS REPORT"), prepared in good faith and on a reasonable basis, setting
forth in reasonable detail a pro forma determination as of the Closing Date of
the prorations set forth in Section 3.2 and the adjustments set forth in Section
3.3 (other than Section 3.3(c)). The Preliminary Adjustments Report shall be
certified by an authorized officer of the general partner of the General Partner
to have been prepared in good faith and on a reasonable basis.
(b) Within 60 days after the Closing Date, Seller
will deliver to Buyer a report (the "FINAL ADJUSTMENTS REPORT"), prepared in
good faith and on a reasonable basis, setting forth in reasonable detail the
final determination of the prorations set forth in Section 3.2 and the
adjustments set forth in Section 3.3 (including Section 3.3(c)). The Final
Adjustments Report shall make such changes to the Preliminary Adjustments Report
as are necessary to cover those prorations or adjustments which (i) were
estimated or were not calculated as of the Closing Date in the Preliminary
Adjustments Report and (ii) were adjusted in the Preliminary Adjustments Report
and which require subsequent adjustment. The Final Adjustments Report shall be
certified by an authorized officer of the general partner of the General Partner
to be true, complete and correct as of the date it is delivered.
Buyer shall provide Seller with reasonable access to all
records which Buyer has in its possession and which are necessary for Seller to
prepare the Final Adjustments Report.
(c) Within 30 days after receipt of the Final
Adjustments Report, Buyer shall review the Final Adjustments Report and notify
Seller whether or not Buyer accepts all or any of the prorations and adjustments
set forth on the Final Adjustments Report. If Buyer
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accepts the Final Adjustments Report with respect to all prorations and
adjustments contained therein, Buyer or Seller, as appropriate, shall, within
five Business Days of such acceptance, make the following payments: (i) if the
Purchase Price calculated based on the Final Adjustments Report is greater than
the Purchase Price calculated based on the Preliminary Adjustments Report, Buyer
shall pay such difference to Seller in cash by wire or interbank transfer in
immediately available funds, or (ii) if the Purchase Price calculated based on
the Final Adjustments Report is less than the Purchase Price calculated based on
the Preliminary Adjustments Report, Seller shall pay such difference to Buyer in
cash by wire or interbank transfer in immediately available funds, and such
amounts to be paid by Seller shall not be subject to the limitations of Article
XII or reduce the Seller's Escrow; provided that Buyer may, at its option, seek
payment of such amounts from Seller's Escrow. In the event any payment required
by this Section 3.4(c) is not made when due, Seller or Buyer, as appropriate,
shall make the payment required by this Section 3.4(c) with interest accruing
from the date such payment was due at the Prime Rate plus 5%.
(d) If Buyer in good faith objects to any
prorations and/or adjustments set forth on the Final Adjustments Report, Buyer
shall give notice thereof to Seller within 30 days after receipt of the Final
Adjustments Report, specifying in reasonable detail the nature and extent of
such disagreement and Buyer and Seller shall have a period of 30 days from
Seller's receipt of such notice in which to resolve such disagreement. If such
notice of objection is not received by Seller within 30 days after receipt of
the Final Adjustments Report, it shall be deemed that Buyer has accepted the
Final Adjustments Report with respect to all items set forth therein and within
three Business Days after the expiration of such 30-day period Buyer or Seller,
as appropriate, shall make the payments described in Section 3.4(c). Any
disputed amounts which cannot be agreed to by the parties within 30 days from
Seller's receipt of Buyer's notice of objection to any of the adjustments set
forth in the Final Adjustments Report shall be determined by a nationally
recognized accounting firm selected by Seller and Buyer which has not regularly
rendered accounting or auditing services to Seller or Buyer or any of their
respective Affiliates within two years prior to the date of this Agreement (the
"Accountants") in accordance with the engagement letter set forth on Exhibit C
attached hereto with such changes as may be requested by the Accountants and
approved by Seller and Buyer. The engagement of and the determination by the
Accountants shall be binding on and shall be nonappealable by Seller and Buyer.
In the event that (a) the Purchase Price calculated based on the determination
by the Accountants is less than the Purchase Price calculated based on the Final
Adjustments Report, the fees and expenses payable to the Accountants shall be
paid by Seller or (b) the Purchase Price calculated based on the determination
of the Accountants is greater than or equal to the Purchase Price calculated
based on the Final Adjustments Report, the fees and expenses payable to the
Accountants shall be paid by Buyer. Within five Business Days after the
determination by the Accountants of all disputed prorations and/or adjustments,
Buyer or Seller, as appropriate, shall make the payments described in Section
3.4(c) as if the determinations of the Accountants were included in the Final
Adjustments Report. In the event any payment required by this Section 3.4(d) is
not made when due, Seller or Buyer, as appropriate, shall make the payment
required by this Section 3.4(d) with interest accruing from the date such
payment was due at the Prime Rate plus 5%.
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3.5 DISPUTED LIABILITIES. If a proration or adjustment to the
Purchase Price is made in Buyer's favor for any liability assumed by Buyer but
is in good faith being contested by Seller as of the Closing Date, and if Buyer
is relieved of this liability, Buyer shall pay to Seller or its designee in cash
(by means of wire or interbank transfer in immediately available funds) an
amount equal to the unpaid portion of this liability within five Business Days
after the date Buyer is relieved of this liability. In the event any payment
required by this Section 3.5 is not made by Buyer when due, Buyer shall make the
payment required by this Section 3.5 with interest accruing from the date such
payment was due at the Prime Rate plus 5%.
3.6 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the classes of assets set forth in Section 1060 of the Code and
the regulations thereunder in the manner agreed to by the parties prior to the
Closing. After the Closing, Seller shall cooperate with Buyer in the
preparation, execution and filing with the IRS of all information returns and
supplements thereto required to be filed by the parties under Section 1060 of
the Code relating to the allocation of such consideration, and Seller and Buyer
agree to file Form 8594 (or any substitute therefor) when required by applicable
law.
ARTICLE IV
4. ASSUMED LIABILITIES AND EXCLUDED ASSETS.
4.1 ASSIGNMENT AND ASSUMPTION. (a) Seller will assign, and
Buyer will assume and perform as they become due, for all periods on or after
the Adjustment Time (and prior to the Adjustment Time with respect to
liabilities and obligations for which a Purchase Price Adjustment is made in
Buyer's favor under Section 3.3), the following liabilities and obligations of
Seller (collectively, the "ASSUMED LIABILITIES"): (A) Seller's obligations to
subscribers of the Business for (i) refunds of subscriber deposits held by
Seller as of the Closing Date in respect of which a Purchase Price adjustment is
made in Buyer's favor under Section 3.3(b), (ii) refunds of subscriber advance
payments held by Seller as of the Closing Date for services to be rendered by
the System after the Closing Date, in respect of which a Purchase Price
adjustment is made in Buyer's favor under Section 3.3(b) and (iii) the delivery
of cable television service to customers of the System after the Closing Date in
a manner consistent with past practice; (B) obligations and liabilities in
respect of which a Purchase Price adjustment in Buyer's favor is made under
Section 3.3 including, but not limited to, accrued but unpaid real and personal
property taxes related to the Assets which correspond to a period of time prior
to the Adjustment Time, expenses accrued under Governmental Permits and Seller
Contracts which correspond to a period of time prior to the Adjustment Time and
certain accrued vacation pay; (C) obligations accruing and relating to periods
on or after the Adjustment Time under Governmental Permits and Seller Contracts;
(D) any taxes accrued on or after the Adjustment Time in connection with the
ownership of the Assets and the ownership of the Assets and the operation of the
Business; and (E) all other liabilities of Seller arising out of or relating to
the conduct of the Business and incurred in the ordinary course of business.
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(b) Except for the Assumed Liabilities, Buyer will
not assume or have any responsibility for any liabilities or obligations of
Seller which arise out of, result from, or relate to, (i) the Excluded Assets or
(ii) the conduct of the Business prior to the Adjustment Time (except to the
extent a Purchase Price adjustment in Buyer's favor is made under Section
3.3(b)) (collectively, the "EXCLUDED LIABILITIES"). Seller shall indemnify
Buyer, in accordance with Article XII, against any claim that Buyer is liable
for the Excluded Liabilities.
4.2 EXCLUDED ASSETS. Excluded from the assets which will be
transferred from Seller to Buyer pursuant to this Agreement (collectively, the
"EXCLUDED ASSETS") are all Seller's right, title and interest in, to and under
the following: (a) all programming agreements relating to the Business; (b) all
insurance policies and rights and claims thereunder (except as otherwise
provided in Section 7.7(a)); (c) all bonds, letters of credit, surety
instruments and other similar items and any cash surrender value thereunder; (d)
all cash, cash equivalents and securities; (e) all trademarks, trade names,
service marks, service names, logos and similar proprietary rights used in the
Business; provided, that Buyer shall have the right to use such proprietary
rights for the period commencing on the Closing Date and expiring 90 days after
the Closing Date; (f) any contracts, licenses, authorizations, agreements or
commitments which are not assumed by Buyer pursuant to this Agreement; (g) the
Management Agreement; (h) any asset or properties owned by Seller that are not
used in the Business; (i) all subscriber deposits and advance payments held by
Seller as of the Closing Date in connection with the operation of the Business
for which a Purchase Price adjustment is made in Buyer's favor under Section
3.3(b); (j) all claims, rights and interests in and to any refund for federal,
state or local franchise, income or other taxes or fees (including, but not
limited to, copyright fees) of any nature relating to the operation of the
Business prior to the Closing Date; (k) the account books of original entry,
general ledgers and financial records used in connection with the Business,
provided that for a period of three years after the Closing Date, Buyer shall
have access to and the right to copy, at its expense, during usual business
hours upon reasonable prior notice to Seller, portions of such books and records
that are relevant to Buyer's ownership and operation of the System; (l) the
retransmission consent agreements relating to the carriage of WKRN and WZTV; and
(m) those properties, rights and interests set forth on SCHEDULE 4.2.
ARTICLE V
5. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer as follows:
5.1 ORGANIZATION AND QUALIFICATION. Seller is a limited
partnership duly organized, validly existing and in good standing under the laws
of the state of Colorado and has all requisite partnership power and authority
to own, lease and use the Assets as they are currently owned, leased and used
and to conduct the Business as it is currently conducted. Seller is duly
qualified or licensed to do business and is in good standing under the laws of
Tennessee.
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5.2 AUTHORITY AND VALIDITY. Seller has full partnership power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby by Seller have been
duly and validly authorized by all necessary action on the part of Seller (other
than, with respect to the sale of the Assets, the approval of such transaction
contemplated by this Agreement by the Limited Partners). The General Partner has
taken all necessary action so that it may recommend that the Limited Partners
approve the transactions contemplated by this Agreement. This Agreement has been
duly and validly executed and delivered by Seller and constitutes a valid and
binding obligation of Seller enforceable in accordance with its terms. Except
for the approval by the Limited Partners, no further partnership action on the
part of Seller is required in connection with the consummation of the
transactions contemplated by this Agreement.
5.3 CONSENTS AND APPROVALS; NO VIOLATION. (a) Except for (i)
the Consents, (ii) the consent of the Limited Partners with respect to the
transactions contemplated by this Agreement and (iii) the Regulatory
Requirements, no consent, waiver, approval or authorization of, or filing,
registration or qualification with, any Governmental Authority is required to be
made or obtained by Seller in connection with the execution, delivery and
performance of this Agreement by Seller.
(b) Except as set forth on SCHEDULE 5.3(B), the
execution, delivery and performance of this Agreement by Seller do not and will
not: (a) violate or conflict with any provision of the Partnership Agreement;
(b) violate any Legal Requirement; or (c) (i) violate, conflict with or
constitute a breach of or default under (without regard to requirements of
notice, passage of time or elections of any Person), (ii) permit or result in
the termination, suspension or modification of, (iii) result in the acceleration
of (or give any Person the right to accelerate) the performance of Seller under,
or (iv) result in the creation or imposition of any Encumbrance under, any
Seller Contract or any other instrument evidencing any of the Assets or any
instrument or other agreement to which Seller is a party or by which Seller or
any of its assets is bound or affected, except such violations, conflicts,
breaches, defaults, terminations, suspensions, modifications, and accelerations
which would not, individually or in the aggregate, have a material adverse
effect on the System, the Business, or Seller's ability to perform its
obligations under this Agreement or Buyer's ability to conduct the Business
after the Closing in substantially the same manner in which it is currently
conducted by Seller.
5.4 COMPLETE SYSTEMS. Except as set forth on SCHEDULE 5.4, the
Assets represent all assets, properties, franchises, licenses, permits,
consents, certificates, authorities, operating rights, leases, contracts, (with
the exception of programming contracts and retransmission consents which Buyer
acknowledges may need to be replaced in order for Buyer to continue to operate
the Business), agreements, commitments and arrangements reasonably necessary for
the conduct of the Business in the ordinary course in the same manner as that in
which such business is currently conducted by Seller.
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5.5 TITLE. Except as set forth on SCHEDULE 5.5 and for the
Permitted Encumbrances, Seller has, and on the Closing Date will have, good and
marketable title to the Assets. The Assets on the Closing Date will be free and
clear of all Encumbrances of any kind or nature, other than Permitted
Encumbrances.
5.6 REAL PROPERTY. (a) All the Assets consisting of interests
in Real Property that are material to the conduct of the Business are described
on SCHEDULE 1.7. Seller has valid leasehold interests in Real Property leased by
Seller under written leases or subleases, correct and complete copies of which
have been made available to Buyer.
(b) All material easements, rights-of-way and other
rights which are necessary in any material respect for Seller's current use of
any Real Property are valid and in full force and effect, and, to the Best of
Seller's Knowledge, Seller has not received any notice with respect to the
termination or breach of any of those rights.
5.7 ENVIRONMENTAL MATTERS. (a) Except as set forth on SCHEDULE
5.7, to the Best of Seller's Knowledge, Seller's use of the Real Property
complies in all material respects with all Environmental Laws. Seller has not
received written notice or, to the Best of Seller's Knowledge, oral notice of
any claim or investigation based on Environmental Laws which relates to any Real
Property or any operations conducted by Seller on such Real Property.
(b) Seller has provided, or prior to Closing will
provide, Buyer with complete and correct copies of (i) all studies, reports,
surveys or other materials in Seller's possession relating to the presence or
alleged presence of Hazardous Substances at, on or affecting the Real Property,
(ii) all notices or other materials in Seller's possession that were received
from any Governmental Authority having the power to administer or enforce any
Environmental Laws relating to current or past ownership, use or operation of
the Real Property or activities at the Real Property and (iii) all materials in
Seller's possession relating to any claim, allegation or action by any private
third party under any Environmental Law.
5.8 COMPLIANCE WITH LAW; GOVERNMENTAL PERMITS. (a) Except as
set forth on SCHEDULE 5.8, the ownership, leasing and use of the Assets as they
are currently owned, leased and used by Seller and the conduct of the Business
as it is currently conducted by Seller, do not violate any Legal Requirement,
which violation(s), individually or in the aggregate, reasonably could be
expected to have a material adverse effect on the Business. Seller has not
received any notice claiming a violation by Seller or the Business of any Legal
Requirement applicable to Seller or the Business as it is currently conducted
and, to the Best of Seller's Knowledge, no basis exists for any person to claim
that such a violation exists.
(b) SCHEDULE 1.5 lists all Governmental Permits
that are material to the conduct of the Business as it is currently conducted by
Seller, together with the expiration date of each Governmental Permit and any
Franchise Fee charged, as of June 30, 1996, by the applicable Governmental
Authority. Complete and correct copies of all such Governmental Permits as
currently in effect have been, or prior to the Closing will be, made available
to Buyer. All such
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Governmental Permits are currently in full force and effect. There is no action,
proceeding or investigation pending or, to the Best of Seller's Knowledge,
threatened, relating to the termination, suspension or modification of any such
Governmental Permit and Seller is in compliance in all material respects with
the terms and conditions of all Governmental Permits.
(c) The operation of the System has been, and is,
in compliance in all material respects with the Communications Act of 1934, as
amended (as so amended, the "COMMUNICATIONS ACT"), and the rules and regulations
of the Federal Communications Commission (the "FCC"), except that, as to any
rate regulation thereunder the foregoing is limited to the Best of Seller's
Knowledge. Seller has delivered, or prior to Closing will deliver, to Buyer
complete and correct copies of all reports and filings for the past three years
made or filed pursuant to the Communications Act or FCC rules and regulations
with respect to the Business.
(d) To the Best of Seller's Knowledge, the
operation of the System has been, and is, in compliance in all material respects
with the Cable Television Consumer Protection and Competition Act of 1992 (the
"CABLE ACT"), and the rules and regulations of the FCC promulgated thereunder.
All broadcast television signals carried by the System pursuant to the
Retransmission Consent Agreements and Must Carry Election are being carried in
compliance in all material respects with the Communications Act and the Cable
Act. Copies of the Retransmission Consent Agreements and Must Carry Election
have been provided to Buyer by Seller.
(e) To the Best of Seller's Knowledge, the
operation of the System has been, and is, in compliance in all material respects
with the Telecommunications Act of 1996 (the "TELECOM ACT"), and the rules and
regulations of the FCC promulgated thereunder.
5.9 SELLER CONTRACTS. SCHEDULE 1.8 lists all Seller Contracts
that are material to the conduct of the Business as it is now conducted.
Complete and correct copies of the Seller Contracts as currently in effect have
been, or prior to the Closing will be, made available to Buyer. Neither Seller
nor, to the Best of Seller's Knowledge, any other party to any Seller Contract
is in any material respect in breach of the performance of its obligations under
any Seller Contract.
5.10 COPYRIGHT COMPLIANCE. Seller has deposited with the
United States Copyright Office all statements of account and other documents and
instruments, and paid all royalties, supplemental royalties, fees and other sums
to the United States Copyright Office, required under the Copyright Act with
respect to the Business and operations of the System as are required to obtain,
hold and maintain the compulsory copyright license for cable television systems
prescribed in Section 111 of the Copyright Act. Seller and the System are in
material compliance with the Copyright Act. Seller and the System are entitled
to hold and do now hold the compulsory copyright license described in Section
111 of the Copyright Act, which compulsory copyright license is in full force
and effect and has not been revoked, canceled, encumbered or materially
adversely affected in any manner. Seller has made available to Buyer
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complete and correct copies of all reports and filings, and all reports and
filings for the past three years, made or filed pursuant to the Copyright Act
with respect to the Business. Seller has not received any notice to the effect
that the conduct of the Business as currently conducted infringes on the rights
of any Person in any copyright or other intellectual property right, except as
to potential copyright liability arising from the performance, exhibition or
carriage of any music on the System.
5.11 FINANCIAL STATEMENTS. (a) Seller has delivered to Buyer
correct and complete copies of certain financial information for the System for
the years ended December 31, 1995 and December 31, 1994 and the six-month period
ended June 30, 1996 (collectively, the "SELLER FINANCIAL STATEMENTS"). Except
for the absence of footnote disclosures, cash flow statements and statements of
equity and except for estimated, annualized or projected financial information,
the Seller Financial Statements fairly present, in all material respects, the
results of operations of the System for the respective periods ended on such
dates, all in conformity with GAAP consistently applied, and with respect to the
Seller Financial Statements for the six-month period ended June 30, 1996,
subject to normal year-end adjustments (none of which are expected to be
material in amount).
(b) Since the latest date of the Seller Financial
Statements (i) the Business has been operated only in the ordinary course and
(ii) there has been no material adverse change in, and no event has occurred
which, so far as reasonably can be foreseen, is likely, individually or in the
aggregate, to result in any material adverse change in the results of operations
of the Business, other than any change arising out of matters of a general
economic nature or matters (including, but not limited to, competition caused by
or arising from direct broadcast satellite, the Multichannel Multipoint
Distribution Service, legislation, rule making and regulation) affecting the
cable television industry (national or regional) in general.
5.12 LEGAL PROCEEDINGS. Except as set forth on SCHEDULE 5.12,
and except for any judgments, orders, actions, suits, proceedings or
investigations as may affect the cable television industry (national or
regional) generally, there is no judgment or order outstanding, or any action,
suit, proceeding or investigation by or before any Governmental Authority or any
arbitrator pending or, to the Best of Seller's Knowledge, threatened, involving
or affecting any of the Assets or the Business which, if adversely determined,
would have a material adverse effect on the Assets or the Business or would
materially impair the ability of Seller to perform its obligations under this
Agreement.
5.13 EMPLOYMENT MATTERS. (a) Seller does not employ any
individuals in connection with the operation of the Business and does not, and
is not obligated to, maintain or contribute to any employee benefit plan, as
defined in Section 3(3) of ERISA. All individuals managing the operations of the
Business are employees of TCI or its Affiliates (other than Seller) (the
"EMPLOYER"). The Employer is reimbursed for employee-related expenses relating
to the operations of the Business by Seller under the Management Agreement or
the Partnership Agreement.
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(b) To the Best of Seller's Knowledge after inquiry
of Employer, Employer has complied in all material respects with all Legal
Requirements relating to the employment of labor and those relating to wages,
hours, collective bargaining, unemployment compensation, worker's compensation,
equal employment opportunity, age and disability discrimination, immigration
control and the payment and withholding of taxes with respect to employees of
Employer who primarily perform services in connection with the operation of the
Business.
(c) Employer is not a party to any contract with
any labor organization, and Employer has not recognized or agreed to recognize
any union or other collective bargaining unit with respect to employees of
Employer who primarily perform services in connection with the operation of the
Business. Except as set forth on SCHEDULE 5.13(c), no union or other collective
bargaining unit has been certified as representing any of the employees engaged
in the operation of the Business, and, to the Best of Seller's Knowledge,
Employer has not received any request from any party for recognition as a
representative of employees engaged in the operation of the Business for
collective bargaining purposes. Neither Seller nor Employer is party to any
agreement, oral or written, express or implied, that would require Buyer to
employ any individual after the Closing Date.
(d) SCHEDULE 5.13(d) sets forth a true and complete
list of all individuals employed by Employer who primarily perform services with
respect to the operation of the Business together with the employees' salaries
or wages as of June 30, 1996. Except as provided on SCHEDULE 5.13(d), neither
Seller nor Employer is a party to any written employment contract, agreement,
commitment or arrangement with any individual identified on SCHEDULE 5.13(d).
(e) Except for those plans described on SCHEDULE
5.13(e) and in the TCI Employee Handbook dated February, 1995 (the "EMPLOYER
PLANS"), which are sponsored by the Employer, or to which the Employer
contributes or is obligated to contribute, the employees of Employer who
primarily perform services with respect to the operation of the Business do not
receive benefits under any bonus, deferred compensation, pension,
profit-sharing, retirement, severance pay, insurance, stock purchase, stock
option, or other fringe benefit plan, arrangement or practice, or any other
employee benefit plan, as defined in Section 3(3) of ERISA.
(f) Seller has not incurred or taken any action,
and to the Best of Seller's Knowledge, no action or event has occurred, that
could cause Seller to incur any material liability (i) under Section 412 of the
Code or Title IV of ERISA with respect to any Employer Plan that is a
single-employer plan, within the meaning of Section 4001(a)(15) of ERISA, (ii)
on account of a partial or complete withdrawal from any Employer Plan that is a
multiemployer plan, within the meaning of Section 3(37) of ERISA, or on account
of any unpaid contributions to any such multiemployer plan, or (iii) for any tax
or penalty under Section 4975 of the Code or Section 502(i) of ERISA on account
of any prohibited transaction, within the meaning of Section 4975 of the Code
or Section 406 of ERISA, with respect to any Employer Plan.
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5.14 SYSTEM INFORMATION. (i) The number of Equivalent Basic
Subscribers served by the System, the number of subscribers served by the System
taking Expanded Basic Services, the bandwidth of the System and channel line up
of the System and (ii) to the Best of Seller's Knowledge, the number of Homes
Passed by the System and the approximate number of miles of plant included in
the Assets, each as of June 30, 1996, are as set forth on SCHEDULE 5.14. The
Basic Subscriber Rate and rate for Expanded Basic Services, each as of June 30,
1996, are as set forth on SCHEDULE 1.1.
5.15 FINDERS AND BROKERS. Except for its engagement of Xxxxxxx
& Associates, L.P. to assist Seller in the solicitation of offers to purchase
the Assets and except for a disposition fee payable by Seller to an Affiliate
pursuant to its Partnership Agreement, Seller has not employed any financial
advisor, broker or finder or incurred any liability for any financial advisory,
brokerage, finder's or similar fee or commission in connection with the
transactions contemplated by this Agreement.
5.16 TAX MATTERS. Except as set forth on SCHEDULE 5.16, (a)
all Tax Returns required to be filed by Seller before the Closing with respect
to the Business or the Assets have been or will be filed on or before the
Closing and (b) all Taxes shown as due or payable before the Closing on such Tax
Returns have been or will be paid when required by law.
5.17 CONDITION OF ASSETS. The tangible Assets, taken as a
whole, are in generally good working condition and repair, normal wear and tear
excepted, and are capable of being used to deliver CATV services to the present
subscriber base in a manner consistent with past practices of Seller.
5.18 REGULATION OF RATES. As of the date hereof, none of the
political entities or authorities which have granted a Governmental Permit have
been, or have applied to be, certified to regulate CATV rates charged by the
Seller pursuant to the Cable Act and the rules and regulations of the FCC.
Solely as of the date hereof, Seller has not received any notice of receipt by
the FCC of any complaints on Form 329 of tier rates. Seller has not received any
notice that it has any obligation or liability to refund any portion of the
revenue received by Seller from the subscribers of the System as of the date
hereof. There has been no correspondence sent by or delivered to Seller within
the past year or, to the Best of Seller's Knowledge, within the past three
years, in any way relating to the regulation of CATV rates (other than
transmittal of rules themselves, regulations and rulemakings and general
announcements that are not specifically related to the regulation of rates of
the System), from the FCC or any other Governmental Authority.
5.19 INSURANCE. Seller has maintained insurance policies in
the ordinary course of business which when taken together provide insurance
coverage for the Assets and the operations of the Business as is customary for
similar businesses similarly situated.
5.20 NO OTHER COMMITMENT TO SELL. No material part of the
System or the Assets is directly or indirectly subject in any manner to any
written or oral commitment or any
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arrangement for the sale, transfer, assignment, or disposition thereof, in whole
or in part, except pursuant to this Agreement.
ARTICLE VI
6. BUYER'S REPRESENTATIONS AND WARRANTIES.
Buyer represents and warrants to Seller as follows:
6.1 ORGANIZATION AND QUALIFICATION. Buyer is a limited
liability limited partnership duly organized, validly existing and in good
standing under the laws of its state of formation and has all requisite
partnership power and authority to carry on its business as currently conducted
and to own, lease, use and operate its assets. Buyer is duly qualified or
licensed to do business and is in good standing under the laws of each
jurisdiction in which the character of the properties owned, leased or operated
by it or the nature of the activities conducted by it makes such qualification
necessary, except where the failure to be so qualified or licensed and in good
standing would not have a material adverse effect on the validity, binding
effect or enforceability of this Agreement or the ability of Buyer to perform
its respective obligations under this Agreement.
6.2 AUTHORITY AND VALIDITY. Buyer has all requisite
partnership power and authority to execute, deliver and perform its obligations
under this Agreement. The execution and delivery by Buyer of, the performance by
Buyer of its obligations under, and the consummation by Buyer of the
transactions contemplated by, this Agreement have been duly authorized by all
requisite partnership action of Buyer and no other partnership proceedings on
the part of Buyer are necessary to authorize the execution and delivery of this
Agreement or the performance of Buyer's obligations hereunder. This Agreement
has been duly and validly executed and delivered by Buyer and constitutes a
valid and binding agreement of Buyer enforceable in accordance with its terms.
6.3 NO BREACH OR VIOLATION. (a) Except for (i) any consents
that will be obtained by Buyer or waived on or prior to the Closing Date and are
identified on SCHEDULE 6.3(a), (ii) filings and consents which, if not made or
obtained, would not have a material adverse effect on Buyer's ability to perform
its obligations under this Agreement and (iii) the Regulatory Requirements, no
consent, waiver, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority is required to be made or
obtained by Buyer in connection with the execution, delivery and performance of
this Agreement by Buyer.
(b) The execution, delivery and performance of this
Agreement by Buyer do not and will not: (a) violate or conflict with any
provision of Buyer's Certificate of Incorporation or By-Laws or partnership
agreement, as the case may be, (b) violate any Legal Requirement; or (c) (i)
violate, conflict with or constitute a breach of or default under (without
regard to requirements of notice, passage of time or elections of any Person),
(ii) permit or result in the termination, suspension or modification of, (iii)
result in the acceleration of (or give any
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Person the right to accelerate) the performance of Buyer under, or (iv) result
in the creation or imposition of any Encumbrance under, any material contract,
agreement, arrangement, commitment or plan to which Buyer is a party or by which
Buyer or any of its assets is bound or affected, except such violations,
conflicts, breaches, defaults, terminations, suspensions, modifications and
accelerations as would not, individually or in the aggregate, have a material
adverse effect on Buyer's ability to perform its obligations under this
Agreement.
6.4 LITIGATION. (a) There are no claims, actions, suits,
proceedings or investigations pending or, to the best of Buyer's knowledge,
threatened, in any court or before any governmental agency or instrumentality,
or before any arbitrator, by or against or affecting or relating to Buyer or any
of its Affiliates which, if adversely determined, would restrain or enjoin the
consummation of the transactions contemplated by this Agreement or declare
unlawful the transactions or events contemplated by this Agreement or cause any
of such transactions to be rescinded.
(b) There are no judgments, injunctions, orders or
other judicial or administrative mandates outstanding against or affecting Buyer
or any of its Affiliates which would materially hinder or delay the consummation
of the transactions contemplated by this Agreement.
6.5 FINANCIAL STATEMENTS. Buyer has delivered to Seller copies
of its audited financial statements for its last fiscal year ("BUYER FINANCIAL
STATEMENT"). The Buyer Financial Statement and the notes thereto fairly present
the assets, liabilities and financial condition of Buyer as of the date thereof
and the results of operations and cash flows or changes in financial position,
as applicable, of Buyer for the period ended on such date, all in conformity
with GAAP consistently applied, except as may be noted therein. Buyer has
delivered to Seller copies of its unaudited financial statements for its last
fiscal quarter ("BUYER INTERIM FINANCIAL STATEMENT"). Except as noted therein,
the Buyer Interim Financial Statement was prepared on a basis consistent with
the Buyer Financial Statement and fairly presents, in conformity with GAAP
consistently applied, the financial position of Buyer as of such date and the
results of operations and cash flows or changes in financial position, as
applicable, for such period, subject to normal year-end adjustments (none of
which are expected to be material in amount), other adjustments noted therein
and the absence of footnotes.
6.6 ADEQUATE FINANCING. Buyer is able to obtain, through
borrowings under existing lines of credit, all funds necessary to satisfy all
its obligations under this Agreement and with respect to the transactions
contemplated by this Agreement, including its obligations to purchase the Assets
and to pay the Purchase Price to Seller.
6.7 FINDERS AND BROKERS. Buyer has not employed any financial
advisor, broker or finder or incurred any liability for any financial advisory,
brokerage, finder's or similar fee or commission in connection with the
transactions contemplated by this Agreement for which Seller will in any way
have any liability.
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6.8 QUALIFICATION OF BUYER. Buyer knows of no reason why it
cannot obtain the licenses and permits necessary for it to own and operate the
Business in the manner in which it is currently conducted by Seller.
ARTICLE VII
7. ADDITIONAL COVENANTS.
7.1 ACCESS TO PREMISES AND RECORDS. Between the date of
execution and delivery of this Agreement and the Closing Date, Seller will give
Buyer and its representatives, during normal business hours and with reasonable
prior notice, access to the books and records of the Business and to the Assets
and will furnish to Buyer and its representatives such information regarding the
Business and the Assets as Buyer may from time to time reasonably request.
7.2 CONTINUITY AND MAINTENANCE OF OPERATIONS; FINANCIAL
STATEMENTS; CORRESPONDENCE RELATING TO CATV RATES. Except as to actions which
Buyer has been advised and to which it has consented in writing and except as
specifically permitted or required by this Agreement or required by any Legal
Requirement, Seller shall:
(a) Operate the Business in the ordinary course
consistent with past practices and will use commercially reasonable efforts to
cause Employer to keep available the services of the employees of the Employer
who are primarily involved in the operation of the Business and to preserve any
beneficial business relationships with customers, suppliers and others having
business dealings with Seller relating to the Business;
(b) Maintain the Assets in operating condition;
(c) Maintain adequate inventories of spare
Equipment consistent with past practice;
(d) Maintain insurance as in effect on the date of
this Agreement;
(e) Keep all of its business books, records and
files in the ordinary course of business in accordance with past practices;
(f) Continue to implement its procedures for
connection of service and disconnection and discontinuance of service to
subscribers whose accounts are delinquent in accordance with those in effect on
the date of this Agreement;
(g) Not sell, transfer or assign any Assets other
than in the ordinary course of business;
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(h) Use commercially reasonable efforts not to
permit any material amendment to, or cancellation of, any of the Governmental
Permits or Seller Contracts;
(i) Not enter into any contract or commitment for
the acquisition of goods or services relating to the System or the Business
involving an expenditure in excess of $50,000 other than in the ordinary course
of business;
(j) Not take or omit to take any action that would
cause Seller to be in breach of any of its representations or warranties in this
Agreement in any material respect, provided, however, that the foregoing shall
not preclude Seller from engaging a financial advisor to render an opinion as to
the fairness, from a financial point of view, of the transactions contemplated
by this Agreement; or
(k) Not extend either of two leases for the Real
Property located at 000 Xxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx or 0000
Xxxxxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxxxx for a period beyond one year from its
current date of expiration or extension, as applicable, without Buyer's written
consent, which consent may not be unreasonably withheld; provided, that Buyer
shall be deemed to have consented thereto if Buyer has not given Seller written
notice of its refusal to give consent, setting forth the reason for such
refusal, within three Business Days of Buyer's receipt of Seller's written
request for consent; provided, further, that Buyer's refusal to give consent to
an increase in rental rate to reflect current market conditions at the time of
extension of such lease shall be deemed to be unreasonable.
Seller shall deliver to Buyer, promptly after such statements
and reports become available to Seller, correct and complete copies of the
unaudited income statement and operating reports for the Business for the year
ended December 31, 1996 (the "1996 FINANCIAL STATEMENTS") and unaudited monthly
income statements and operating reports (the "MONTHLY FINANCIAL STATEMENTS") and
unaudited quarterly income statements and operating reports (the "QUARTERLY
FINANCIAL STATEMENTS") for the Business that are prepared by or for Seller at
any time between the date of this Agreement and the Closing. Except for the
absence of footnote disclosures, cash flow statements and statements of equity
and except for estimated, annualized or projected financial information, the
1996 Financial Statements and Quarterly Financial Statements shall fairly
present, in all material respects, the results of operations of the System for
the respective periods ended on such dates, all in conformity with GAAP
consistently applied, and with respect to the Quarterly Financial Statements,
subject to normal year-end adjustments (none of which are expected to be
material in amount); provided, that, Seller shall not be required to make and
shall not be deemed to make any representation or warranty concerning the
accuracy of the contents of the Quarterly Financial Statements for the nine
months ended September 30, 1996 or the Monthly Financial Statements.
Seller shall deliver to Buyer any correspondence received by
Seller between the date of this Agreement and the Closing Date, in any way
relating to the regulation of CATV rates (other than transmittal of rules
themselves, regulations and rulemakings and general
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announcements that are not specifically related to the regulation of rates of
the System), from the FCC or any other Governmental Authority.
7.3 EMPLOYEE MATTERS. (a) Buyer may offer employment to the
employees of Employer listed on Schedule 5.13(d) who primarily perform services
with respect to the operation of the Business as of the Closing Date. Not later
than February 27, 1997, Buyer shall deliver to Seller a notice containing the
names of employees of the Business whom Buyer intends to hire on the Closing
Date; provided, that if the Termination Date is extended by Seller or Buyer,
Buyer may deliver to Seller a notice no later than 60 Business Days prior to the
extended Termination Date updating the lists of employees which Buyer intends to
hire on the Closing Date. Seller shall undertake to provide to all affected
employees and any other necessary persons any notice that may be required under
the WARN Act. Except as provided herein, Employer shall retain all liabilities
arising prior to the Adjustment Time relating to the employees of Employer,
including severance.
(b) Nothing in this Section 7.3 or elsewhere in
this Agreement is intended to confer upon any employee of Employer or his or her
legal representative or heirs any rights as a third party beneficiary or
otherwise or any remedies of any nature or kind whatsoever under or by reason of
this Agreement, or the transactions contemplated hereby, including, but not
limited to, any rights of employment or continued employment. All rights and
obligations created by this Agreement are solely between the parties hereto.
7.4 FRANCHISE EXTENSION. Seller covenants and agrees that, as
soon as practicable following the execution of this Agreement, it will apply to
the applicable Governmental Authority for an extension (the "EXTENSION") of the
franchise described on SCHEDULE 1.5 with an expiration date prior to June 30,
2000. Seller shall use commercially reasonable efforts to obtain the Extension
for such franchise to an expiration date of March 10, 2005, but in no event
shall the Extension have an expiration date earlier than June 30, 2000. The
Extension may include modifications customarily imposed by Governmental
Authorities issuing cable television franchises as a condition to obtaining the
Extension but in any event such modifications shall not impose any conditions or
obligations which are materially more burdensome than contained in the current
franchise.
7.5 ENVIRONMENTAL REPORT. Buyer may cause to be prepared and
delivered at its expense, within 30 days after the date of this Agreement, a
Phase I environmental report and, within 60 days after the date of this
Agreement, a Phase II environmental report for the Real Property described on
Schedule 1.7. Seller shall cooperate with Buyer and permit access to such Real
Property during normal business hours in order for Buyer or its representatives
to inspect such property and the related environmental records in the possession
of Seller, as necessary for the preparation of the Phase I environmental report
or Phase II environmental report. Buyer shall deliver to Seller a copy of each
environmental report within three Business Days of receipt of such report by
Buyer. Subject to Section 10.1(b)(vi), if such environmental reports disclose
one or more adverse environmental conditions, Seller shall assume full
responsibility for remediation of each such environmental condition and shall
bear all expenses incurred in connection
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therewith; provided, that Seller concludes, in its reasonable judgment, that the
cost of all such remediation shall not exceed $200,000 in which case Seller
shall have the sole right to direct such remediation; provided, further, that if
Buyer agrees to bear any costs of remediation in excess of $200,000, Buyer shall
assume responsibility for overseeing the remediation of each such environmental
condition in consultation with Seller.
7.6 CONSENTS. Seller will use commercially reasonable efforts
to obtain, as soon as practicable and at its expense, (i) all the Required
Consents, in form and substance reasonably satisfactory to Buyer; provided, that
"commercially reasonable efforts" for purposes of this Section 7.6 and for
purposes of Section 7.4 shall not require Seller to undertake extraordinary or
unreasonable measures to obtain such approvals and consents, including, but not
limited to, the initiation or prosecution of legal proceedings or the payment of
fees in excess of normal and usual filing and processing fees (other than any
costs that may be incurred to remedy any noncompliance with the terms of any
Governmental Permit). Buyer will use commercially reasonable efforts to assist
Seller in its efforts to obtain all the Required Consents and the Extensions,
and in connection therewith will consent to such modifications to any
Governmental Permit that a Governmental Authority may request as a condition to
(i) the transfer of such permit to Buyer and/or (ii) obtaining extension of the
term of such Governmental Permit, provided, however, that Buyer will not be
required to agree to any modifications to a Governmental Permit unless they are
customarily imposed by Governmental Authorities issuing cable television
franchises as a condition to obtaining the consent to the transfer of such
franchises and do not impose upon Buyer any conditions or obligations which are
materially more burdensome than are contained in any such Governmental Permit.
If Buyer gives Seller notice that Buyer desires to grant a security interest in
Buyer's rights under any agreement or instrument that is the subject of a
Required Consent, Seller will use commercially reasonable efforts to obtain, and
Buyer will use commercially reasonable efforts to assist Seller in its effort to
obtain, the consent required to grant a security interest, provided, that Buyer
shall be responsible for the payment of any fees in connection therewith, and
provided further that no such consent shall be a condition to the obligations of
Buyer under this Agreement.
7.7 HSR NOTIFICATION. As soon as practicable after the
execution of this Agreement and if required by applicable Legal Requirements,
Seller and Buyer will each complete and file, or cause to be completed and
filed, any notification and report required to be filed under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"). Each of the parties will take any additional action that may be
necessary, proper or advisable, will cooperate to prevent inconsistencies
between their respective filings and will furnish to each other such necessary
information and reasonable assistance as the other may reasonably request in
connection with its preparation of necessary filings or submissions under the
HSR Act. Buyer and Seller shall use commercially reasonable efforts (including
the filing of a request for early termination) to obtain the early termination
of the waiting period under the HSR Act. Buyer and Seller shall each bear
one-half of any required filing fee under the HSR Act.
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7.8 NOTIFICATION OF CERTAIN MATTERS. Each party will promptly
notify the other of any fact, event, circumstance or action the existence or
occurrence of which would cause any of such party's representations or
warranties under this Agreement not to be true in any material respect.
7.9 RISK OF LOSS; CONDEMNATION. (a) Seller will bear the risk
of any loss or damage to the Assets resulting from fire, theft or other casualty
(except reasonable wear and tear) at all times prior to the Closing. If any such
loss or damage is so substantial as to prevent normal operation of any material
portion of the System, Seller shall promptly notify Buyer of that fact and
Buyer, at any time within 10 days after receipt of such notice, may elect by
written notice to Seller either (i) to waive such defect and proceed toward
consummation of the acquisition of the Assets in accordance with this Agreement
or (ii) to terminate this Agreement pursuant to Section 10.1(c)(v). If Buyer
elects to consummate the acquisition of the Assets notwithstanding such loss or
damage and does so, there will be no adjustment in the Purchase Price on account
of such loss or damage (other than a Purchase Price adjustment under Section
3.3(b)(iv)) but all insurance proceeds payable as a result of the occurrence of
the event resulting in such loss or damage (to the extent not previously applied
by Seller with respect to such loss or damage) will be delivered by Seller to
Buyer or the rights to such proceeds will be assigned by Seller to Buyer if not
yet paid over to Seller. In the event that any Assets are damaged or destroyed
prior to the Closing Date but such loss or damage is not so substantial as to
prevent normal operation of any material portion of the System, Seller shall use
commercially reasonable efforts to repair or replace, prior to the Closing Date,
any such Assets with items of like value and quality.
(b) If, prior to the Closing, any part of a
material Asset or an interest in a material Asset is taken or condemned as a
result of the exercise of the power of eminent domain, or if a Governmental
Authority having such power informs Seller or Buyer that it intends to condemn
all or any part of a material Asset (such event being referred to, in either
case, as a "TAKING"), then Buyer may terminate this Agreement pursuant to
Section 10.1(c)(vi). If Buyer does not elect to terminate this Agreement then
(a) if the Closing occurs, Buyer shall have the sole right, in the name of
Seller, if Buyer so elects, to negotiate for, claim, contest and receive all
damages with respect to the Taking, (b) Seller shall be relieved of its
obligation to convey to Buyer the Asset or interests that are the subject of the
Taking and (c) at the Closing Seller shall assign to Buyer all of Seller's
rights (including the right to receive payment of damage) with respect to such
Taking and shall pay to Buyer all damages previously paid to Seller with respect
to the Taking.
7.10 ADVERSE CHANGES. Seller shall promptly notify Buyer in
writing of any materially adverse developments affecting the Assets, the System
or the Business which become known to Seller, including, but not limited to, (i)
any damage, destruction or loss (whether or not covered by insurance) materially
and adversely affecting any of the Assets, the System or the Business, (ii) any
material notice of violation, forfeiture or complaint under any material
Governmental Permits or (iii) anything which, if not corrected prior to the
Closing Date, will prevent Seller from fulfilling any condition to Closing
described in Article VIII.
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7.11 ACTION BY LIMITED PARTNERS. (a) If required by applicable
Legal Requirements and the Partnership Agreement to consummate the transactions
contemplated by this Agreement, or if the Seller otherwise elects to do so, the
Seller, acting through the General Partner, shall in accordance with the
applicable Legal Requirements and the Partnership Agreement: (i) within a
reasonable period of time (as determined by the General Partner) after the
execution and delivery of this Agreement, duly call, give notice of, convene and
hold a special meeting (the "SPECIAL MEETING") of the Limited Partners for the
purpose of approving the transactions contemplated by this Agreement; and (ii)
subject to its fiduciary duties (as determined by the General Partner after
consultation with independent counsel), include in any proxy statement the
determination and recommendation of the General Partner to the effect that the
General Partner, having determined that this Agreement and the transactions
contemplated hereby are in the best interests of Seller and the Limited
Partners, has approved this Agreement and such transactions and recommends that
the Limited Partners vote in favor of the sale of the Assets to Buyer pursuant
to this Agreement.
(b) As soon as practicable after the execution and
delivery of this Agreement, Seller shall file with the SEC under the Exchange
Act, and shall use commercially reasonable efforts to clear with the SEC and
mail to the Limited Partners no later than February 15, 1997, a proxy statement
with respect to the Special Meeting (the "PROXY STATEMENT"). Seller and Buyer
shall cooperate in the preparation of any Proxy Statement; without limiting the
generality of the foregoing, Buyer shall furnish to Seller the information
relating to Buyer required by the Exchange Act to be set forth in the Proxy
Statement. Seller agrees that the Proxy Statement shall comply in all material
respects with the Exchange Act and the rules and regulations thereunder;
provided, however, that no agreement is made by Seller with respect to
information supplied by Buyer expressly for inclusion in the Proxy Statement.
Buyer and its counsel shall be given a reasonable opportunity to review the
Proxy Statement prior to the filing thereof with the SEC.
7.12 NO SOLICITATION. (a) Seller shall not, and shall cause
the General Partner, employees, agents and representatives (including, but not
limited to, any investment banker, attorney or accountant retained by Seller)
not to, initiate, solicit or encourage, directly or indirectly, any inquiries or
the making of any proposal with respect to any Alternative Transaction, engage
in any negotiations concerning, or provide to any other Person any information
or data relating to, the Business, the System, the Assets or Seller for the
purposes of, or have any discussions with any Person relating to, or otherwise
cooperate in any way with or assist or participate in, facilitate or encourage,
any inquiries or the making of any proposal which constitutes, or may reasonably
be expected to lead to, any effort or attempt by any other Person to seek or to
effect an Alternative Transaction, or agree to or endorse any Alternative
Transaction; provided, however, that nothing contained in this Section 7.12
shall prohibit Seller or the General Partner from making any disclosure to the
Limited Partners that, in the judgment of the General Partner based upon the
advice of independent counsel, is required under applicable Legal Requirements;
and provided, further, that (i) Seller or the General Partner may, upon the
unsolicited request of a third party, furnish information or data (including,
but not limited to, confidential information or data) relating to the Business,
the System, the Assets or
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Seller for the purposes of facilitating an Alternative Transaction and
participate in negotiations with a Person making (or who may reasonably be
expected to make) an unsolicited proposal regarding an Alternative Transaction
and (ii) following receipt of a proposal for an Alternative Transaction, Seller
or the General Partner may terminate this Agreement pursuant to Section
10.1(b)(ii).
(b) Each of TCI and Tele-Communications, Inc. shall
not, and shall cause its Affiliates which it controls not to, make a proposal to
Seller regarding an Alternative Transaction. The restriction set forth in this
Section 7.12(b) shall terminate on the earlier of (i) the Closing or (ii)
termination of this Agreement.
7.13 SALES AND TRANSFER TAXES AND FEES. Buyer and Seller shall
each pay one-half of any state or local sales, use, transfer, excise,
documentary or license taxes or fees or any other charge (including filing fees)
imposed by any Governmental Authority as a consequence of the transfer of any
Assets pursuant to this Agreement. Seller shall timely file any sales tax
returns required to be filed with any Governmental Authority as a consequence of
the transfer of any Assets pursuant to this Agreement. Buyer shall cooperate in
the preparation and filing of any submission or application necessary to obtain
any clearance relating to, or, if available, exemption from, any Taxes or fees
described in this Section 7.13.
7.14 COMMERCIALLY REASONABLE EFFORTS. (a) Seller shall use
commercially reasonable efforts to take all steps within its power, and will
cooperate with Buyer, to cause to be fulfilled those of the conditions to
Buyer's obligations to consummate the transactions contemplated by this
Agreement that are dependent upon its actions, and to execute and deliver such
instruments and take such other reasonable actions as may be necessary or
appropriate in order to carry out the intent of this Agreement and consummate
the transactions contemplated hereby.
(b) Buyer shall use commercially reasonable efforts
to take all steps within its power, and will cooperate with Seller, to cause to
be fulfilled those of the conditions to Seller's obligations to consummate the
transactions contemplated by this Agreement that are dependent upon its actions
and to execute and deliver such instruments and take such other reasonable
actions as may be necessary or appropriate in order to carry out the intent of
this Agreement and consummate the transactions contemplated hereby.
7.15 TITLE INSURANCE. Seller shall cooperate with Buyer if
Buyer elects to obtain title insurance policies on any Real Property owned in
fee or leased. Buyer shall have the sole responsibility for obtaining and paying
for such policies. The parties agree that the obtaining of title insurance on
any Real Property shall not be a condition to the obligation of Buyer to
consummate the transactions contemplated hereby. Seller shall deliver to Buyer,
prior to Closing, complete and correct copies of all deeds, surveys and title
insurance policies, in Seller's possession, on any Real Property
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7.16 FCC FORM 626. Seller shall file on a timely basis a Form
626 with the applicable Governmental Authority for each franchise with an
expiration date earlier than the third anniversary of the Closing Date.
7.17 FORMS 394. At Seller's option, Buyer shall prepare, in
form and substance reasonably satisfactory to Seller, within 15 Business Days
after receipt of Seller's written request, and Seller shall file, Forms 394 with
the applicable Governmental Authorities.
ARTICLE VIII
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER.
The obligations of Buyer under this Agreement are subject to
the satisfaction at or prior to the Closing of each of the following conditions,
any one or more of which may be waived by Buyer, in its sole discretion.
8.1 HSR ACT. If required under applicable Legal Requirements,
all filings required under the HSR Act shall have been made and the applicable
waiting period shall have expired or been earlier terminated without the receipt
of any objection or the commencement or threat of any litigation by a
Governmental Authority of competent jurisdiction to restrain the consummation of
the transactions contemplated by this Agreement.
8.2 GOVERNMENTAL OR LEGAL ACTION. No action, suit or
proceeding shall be pending or threatened by any Governmental Authority and no
Legal Requirement shall have been enacted, promulgated or issued or deemed
applicable to any of the transactions contemplated by this Agreement by any
Governmental Authority that would (a) prohibit Buyer's ownership or operation of
all or a material portion of the System, the Business or the Assets or (b)
prevent or make illegal the consummation of the transactions contemplated by
this Agreement.
8.3 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date, with the same effect as though made on and as of the
Closing Date, except for such changes permitted or contemplated by the terms of
this Agreement and except insofar as any of such representations and warranties
relate solely to a particular date or period, in which case they shall be true
and correct in all material respects on such Closing Date with respect to such
date and period.
8.4 PERFORMANCE OF AGREEMENTS. Seller shall have performed in
all material respects all obligations and agreements and complied, or caused to
be complied with, all covenants and conditions required by this Agreement to be
performed or complied with by Seller at or prior to the Closing Date.
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8.5 NO MATERIAL ADVERSE CHANGE. During the period from the
date of this Agreement through and including the Closing Date, there shall not
have occurred any material adverse change in the business, financial condition
or operations of the Business, taken as a whole, other than any change arising
out of matters of a general economic nature or matters (including, but not
limited to, competition caused by or arising from the Multichannel Multipoint
Distribution Service, direct broadcast satellite, legislation, rule making and
regulation) affecting the cable television industry (national or regional)
generally, and Seller shall not have sustained any material loss or damage to
the Assets or the System, whether or not insured, that materially affects the
ability of Seller to conduct the Business in a manner consistent with past
practice.
8.6 CONSENTS AND EXTENSIONS. Seller shall have delivered to
Buyer evidence, in form and substance reasonably satisfactory to Buyer, that all
the Required Consents and Extensions have been obtained, and no Required Consent
shall impose upon Buyer any conditions or obligations which are materially more
burdensome than are contained in the underlying document for which consent has
been obtained, provided, that the Required Consents for the leases for the Real
Property located at 000 Xxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx and 0000
Xxxxxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxxxx may provide for an increased rental
rate to reflect current market conditions.
8.7 TRANSFER DOCUMENTS. Seller shall have delivered to Buyer
customary bills of sale, deeds, assignments and other instruments of transfer
sufficient to convey good and marketable title to the Assets in accordance with
the terms of this Agreement.
8.8 OPINIONS OF SELLER'S COUNSEL. Buyer shall have received
the opinion or opinions of Xxxx, Scholer, Fierman, Xxxx & Handler, LLP, counsel
for Seller, dated the Closing Date, substantially in the form of EXHIBIT D.
8.9 OPINION OF SELLER'S FCC COUNSEL. Buyer shall have received
the opinion of Xxxx, Raywid & Xxxxxxxxx, FCC counsel for Seller, dated the
Closing Date, substantially in the form of Exhibit G.
8.10 DISCHARGE OF LIENS. Seller shall have secured the
termination of all Encumbrances of any nature on the Assets, other than
Permitted Encumbrances.
8.11 NONCOMPETE AGREEMENT. Each of TCI, Tele-Communications,
Inc., Seller and the General Partner shall have executed and delivered to Buyer
a noncompetition agreement, substantially in the form attached as Exhibit H.
8.12 ADDITIONAL DOCUMENTS AND ACTS. Seller shall have
delivered or caused to be delivered to Buyer all other documents required to be
delivered pursuant to this Agreement and done or caused to be done all other
acts or things reasonably requested by Buyer to evidence compliance with the
conditions set forth in this Article VIII.
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8.13 INDEMNITY ESCROW AGREEMENT. Seller shall have executed
and delivered the Indemnity Escrow Agreement.
8.14 1996 FINANCIAL STATEMENTS. Seller shall have delivered to
Buyer correct and complete copies of the 1996 Financial Statements.
8.15 CERTIFICATES. Seller shall have furnished Buyer with such
other certificates of Seller and others, dated as of the Closing Date, to
evidence compliance with the conditions set forth in this Article VIII, as may
be reasonably requested by Buyer.
ARTICLE IX
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER.
The obligations of Seller under the Agreement are subject to
the satisfaction, at or prior to the Closing Date, of each of the following
conditions, any one or more of which may be waived by Seller in its sole
discretion.
9.1 HSR ACT. If required under applicable Legal Requirements,
all filings required under the HSR Act shall have been made and the applicable
waiting period shall have expired or been earlier terminated without the receipt
of any objection or the commencement or threat of any litigation by a
Governmental Authority of competent jurisdiction to restrain the consummation of
the transactions contemplated by this Agreement.
9.2 GOVERNMENTAL OR LEGAL ACTIONS. No action, suit or
proceeding shall be pending or threatened by any Governmental Authority and no
Legal Requirement shall have been enacted, promulgated or issued or deemed
applicable to any of the transactions contemplated by this Agreement by any
Governmental Authority that would (a) prohibit Buyer's ownership or operation of
all or any material portion of the System, the Business or the Assets or (b)
prevent or make illegal the consummation of the transactions contemplated by
this Agreement.
9.3 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date, with the same effect as though made on and as of the
Closing Date, except for such changes permitted or contemplated by the terms of
this Agreement and except insofar as any of such representations and warranties
relate solely to a particular date or period, in which case they shall be true
and correct in all material respects on such Closing Date with respect to such
date and period.
9.4 PERFORMANCE OF AGREEMENTS. Buyer shall have performed in
all material respects all obligations and agreements and complied, or caused to
be complied with, all
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covenants and conditions required by this Agreement to be performed or complied
with by Buyer at or prior to the Closing Date.
9.5 CONSENTS. All Required Consents shall have been obtained
or given.
9.6 OPINIONS OF BUYER'S COUNSEL. Seller shall have received
the opinion or opinions of Xxxxx & Xxxxxxxxx, outside counsel for Buyer, dated
the Closing Date, substantially in the form of EXHIBIT E.
9.7 LIMITED PARTNER APPROVAL. The transactions contemplated by
this Agreement shall have been approved by the affirmative vote of or consent by
the Limited Partners to the extent required by the Partnership Agreement or if
Seller otherwise elects as permitted by Section 7.9.
9.8 PAYMENT OF PURCHASE PRICE. Buyer shall have paid to Seller
the Purchase Price as set forth in Section 3.1.
9.9 ASSUMPTION OF LIABILITIES. Buyer shall have delivered to
Seller a customary assumption of liabilities agreement which is sufficient to
cover Buyer's obligations as set forth in Section 4.1.
9.10 ADDITIONAL DOCUMENTS AND ACTS. Buyer shall have delivered
or caused to be delivered to Seller all other documents required to be delivered
pursuant to this Agreement and done all other acts or things reasonably
requested by Seller to evidence compliance with the conditions set forth in this
Article IX.
9.11 CERTIFICATE. Buyer shall have furnished Seller with such
other certificates of Buyer and others, dated as of the Closing Date, to
evidence compliance with the conditions set forth in this Article IX, as may be
reasonably requested by Seller.
9.12 FAIRNESS OPINION. On or before February 1, 1997, Seller
shall have received an opinion, in form and substance reasonably satisfactory to
Seller, from its financial advisors as to the fairness, from a financial point
of view, of the transactions contemplated by this Agreement.
9.13 INDEMNITY ESCROW AGREEMENT. Buyer shall have executed and
delivered to Seller the Indemnity Escrow Agreement.
9.14 ENVIRONMENTAL REMEDIATION. In the event that any Phase I
environmental report or Phase II environmental report prepared at Buyer's
request pursuant to Section 7.5 discloses one or more adverse environmental
conditions which Seller shall have concluded, in its reasonable judgment, that
the cost of such remediation shall not exceed $200,000, Seller and Buyer shall
have agreed that remediation of such condition(s) has been completed and Seller
has no further obligation with respect thereto.
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ARTICLE X
10. TERMINATION.
10.1 EVENTS OF TERMINATION. This Agreement and the
transactions contemplated by this Agreement may be terminated at any time prior
to the Closing:
(a) by the mutual written consent of Buyer and
Seller;
(b) by Seller:
(i) if the consummation of the transactions
contemplated by this Agreement by Seller would
violate any nonappealable final order, decree or
judgment of any Governmental Authority having
competent jurisdiction;
(ii) following receipt by Seller or the
General Partner of an unsolicited proposal for an
Alternative Transaction with a proposed purchase
price greater than or equal to $21,725,000 to the
extent that the General Partner determines in good
faith on the basis of advice of independent counsel
that such action is necessary or appropriate in
order for the General Partner to act in a manner
that is consistent with its fiduciary obligations
under applicable law; provided, however, that
Seller may not terminate this Agreement pursuant to
this clause (ii) with respect to an unsolicited
proposal for an Alternative Transaction submitted
by a Person, or a Person known by the General
Partner in its reasonable business judgment to be
an Affiliate of such Person, who submitted a
written proposal on October 7, 1996 to purchase the
System pursuant to the competitive auction
conducted by Xxxxxxx & Associates;
(iii) if any representation or warranty of
Buyer made herein is untrue in any material respect
(other than a change permitted or contemplated by
this Agreement) and such breach is not cured within
10 days of Buyer's receipt of a notice from Seller
that such breach exists or has occurred;
(iv) if Buyer shall have defaulted in any
material respect in the performance of any material
obligation under this Agreement and such breach is
not cured within 30 days of Buyer's receipt of a
notice from Seller that such default exists or has
occurred;
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(v) if the conditions to Seller's obligations
to consummate the Closing as set forth in Article
IX cannot reasonably be satisfied on or before the
Termination Date; or
(vi) if any Phase I environmental report or
Phase II environmental report for the Real Property
prepared at Buyer's request pursuant to Section 7.5
discloses one or more adverse environmental
conditions and Seller concludes, in its reasonable
judgment, that the cost of remediation of such
condition(s) will exceed $200,000; provided that
termination pursuant to this Section 10.1(b)(vi)
shall not be effective, and shall be void ab
initio, in the event that within three Business
Days after receipt of Seller's notice of
termination pursuant to Section 10.2 Buyer delivers
notice to Seller that Buyer will bear all costs in
connection with such remediation in excess of
$200,000.
(c) by Buyer:
(i) if the consummation of the transactions
contemplated by this Agreement by Buyer would
violate any nonappealable final order, decree or
judgment of any Governmental Authority having
competent jurisdiction;
(ii) if any representation or warranty of
Seller made herein is untrue in any material
respect (other than due to a change permitted or
contemplated by this Agreement) and such breach is
not cured within 10 days of Seller's receipt of a
notice from Buyer that such breach exists or has
occurred;
(iii) if Seller shall have defaulted in any
material respect in the performance of any material
obligation under this Agreement and such breach is
not cured within 30 days of Seller's receipt of a
notice from Buyer that such default exists or has
occurred;
(iv) if the conditions to Buyer's obligations
to consummate the Closing as set forth in Article
VIII cannot reasonably be satisfied on or before
the Termination Date;
(v) within 10 days after receipt by Buyer of
a notice from Seller that the loss or damage to the
Assets resulting from fire, theft or other casualty
is so substantial as to prevent normal operation of
any material portion of the System, as contemplated
by Section 7.9(a); or
(vi) following a Taking, as contemplated by
the first sentence of Section 7.9(b).
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(d) Unless the Closing shall have theretofore taken
place, by either party after the Termination Date, provided that the terminating
party is not otherwise in default or breach of this Agreement.
10.2 MANNER OF EXERCISE. In the event of the termination of
this Agreement by either Buyer or Seller, pursuant to Section 10.1, notice
thereof shall forthwith be given to the other party and this Agreement shall
terminate and the transactions contemplated hereunder shall be abandoned without
further action by Buyer or Seller.
10.3 EFFECT OF TERMINATION. (a) Subject to paragraph (b) of
this Section 10.3, in the event of the termination of this Agreement pursuant to
Section 10.1 and prior to the Closing, all obligations of the parties hereunder
shall terminate, except for the respective obligations of the parties under
Section 13.14; provided, however, that no termination of this Agreement shall
(i) except as set forth in Section 10.3(b) and Section 10.4, relieve a
defaulting or breaching party from any liability to the other party or parties
hereto for or in respect of such default or (ii) result in the rescission of any
transaction theretofore consummated hereunder.
(b) If this Agreement is terminated by Seller
pursuant to Section 10.1(b)(ii), Seller shall promptly pay to Buyer a
termination fee of $493,750 (the "Termination Fee"). If (i) the Termination Date
is extended by Seller or Buyer to a date later than August 26, 1997, (ii) this
Agreement is terminated by Seller pursuant to Section 10.1(d) prior to the date
which is 360 days from the date of this Agreement, and (iii) Buyer is not in
default or breach of this Agreement, Seller shall promptly pay Buyer a
Termination Fee in the event Seller accepts a proposal for an Alternative
Transaction on or before November 24, 1997. The Termination Fee shall be
liquidated damages and not a penalty, and upon receipt thereof Buyer shall be
precluded from exercising any other right or remedy available under this
Agreement or applicable law.
10.4 LIQUIDATED DAMAGES. Provided Seller is not in default of
this Agreement, in the event of (i) the breach or default by Buyer of its
obligations under this Agreement and (ii) the termination of this Agreement
prior to the Closing, Seller shall have the option, upon notice from Seller to
Buyer given as provided in the Escrow Agreement, to receive as liquidated
damages, and not as a penalty, the Deposit. In the event Seller elects to
receive the Deposit as liquidated damages as set forth in this Section 10.4,
Buyer shall promptly (but in no event more than two Business Days after receipt
of such notice) take all action required under the Escrow Agreement to cause the
Deposit to be released to Seller. If Seller elects to receive the Deposit as
liquidated damages as set forth in this Section 10.4, Seller shall, upon receipt
of the Deposit, be precluded from exercising any other right or remedy available
under this Agreement or applicable law.
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ARTICLE XI
11. NATURE AND SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
11.1 NATURE OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Neither party will be deemed to have made any representation, warranty, covenant
or agreement except as set forth in this Agreement or in any certificate or
other instruments to be delivered by Seller or Buyer pursuant to this Agreement.
Without limiting the generality of the foregoing, neither party will be liable
or bound in any manner by any express or implied representation, warranty,
covenant or agreement that is made by any employee, agent or other Person
representing or purporting to represent such party.
11.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller and Buyer in this Agreement and in the
documents and instruments to be delivered by Seller and Buyer pursuant to this
Agreement shall survive the Closing only as and to the extent set forth in this
Article XI.
11.3 TIME LIMITATIONS. If the Closing occurs, except as set
forth below, Seller shall have no liability to Buyer with respect to any
representation or warranty or any covenant, agreement or obligation to the
extent required to be performed or complied with prior to the Closing Date,
unless on or before the first anniversary of the Closing Date Seller is given
written notice by Buyer asserting a claim with respect thereto and specifying
the factual basis of that claim in reasonable detail to the extent then known by
Buyer. If the Closing occurs, Buyer shall have no liability to Seller with
respect to any representation or warranty or any covenant, agreement or
obligation to the extent required to be performed or complied with prior to the
Closing Date, unless on or before the first anniversary of the Closing Date
Buyer is given written notice by Seller of a claim with respect thereto and
specifying the factual basis of that claim in reasonable detail to the extent
then known by Seller. A claim with respect to any covenants to be performed or
complied with by Buyer or Seller after the Closing Date may be asserted at any
time. Notwithstanding the foregoing, indemnification claims for the breach of
the representations in Sections 5.5 and 5.16 and indemnification claims arising
from any third party claim asserted against Buyer arising from the Excluded
Liabilities may be made by Buyer at any time.
11.4 LIMITATIONS AS TO AMOUNT. (a) If the Closing occurs,
Seller shall have no liability (for indemnification or otherwise) with respect
to any failure or breach of any representation or warranty or any covenant,
agreement or obligation to the extent required to be performed on or prior to
the Closing Date until the total of all damages with respect to such failure or
breach exceeds $50,000 but then for the entire amount of such damages, including
those not in excess of $50,000.
(b) If the Closing occurs, Buyer shall have no
liability (for indemnification or otherwise) with respect to any failure or
breach of any representation or
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warranty or any covenant, agreement, or obligation to the extent required to be
performed on or before the Closing Date until the total of all damages with
respect to such failure or breach exceeds $50,000 but then for the entire amount
of such damages, including those not in excess of $50,000.
(c) If the Closing occurs, Seller's aggregate
liability (for indemnification or otherwise) with respect to any failure or
breach of any representation or warranty or any covenant, agreement or
obligation to the extent required to be performed on or prior to the Closing
Date shall be limited to Buyer's right to make an indemnification claim against
Seller under Article XII and shall be further limited as set forth in Section
12.3.
ARTICLE XII
12. INDEMNIFICATION.
12.1 RIGHTS TO INDEMNIFICATION. Subject to the limitations set
forth in Sections 11.3 and 11.4, Seller agrees to indemnify and hold harmless
Buyer against any loss, liability, claim, damage or expense (including, but not
limited to, reasonable attorneys' fees and disbursements) arising from (a) any
claim for brokerage or agent's or finder's commissions or compensation in
respect of the transactions contemplated by this Agreement by any Person
purporting to act on behalf of Seller, (b) any claim that Buyer is liable for
the Excluded Liabilities and (c) Seller's failure or breach of any
representation, warranty, covenant, agreement or obligation made or required to
be performed by Seller under this Agreement or any document, certificate or
agreement delivered pursuant to this Agreement. Subject to the limitations set
forth in Sections 11.3 and 11.4, Buyer agrees to indemnify and hold harmless
Seller against any loss, liability, claim, damage or expense (including, but not
limited to, reasonable attorneys' fees and disbursements) arising from (a) any
claim for brokerage or agent's or finder's commissions or compensation in
respect of the transactions contemplated by this Agreement by any Person
purporting to act on behalf of Buyer, (b) the failure to perform the obligations
of the Assumed Liabilities or (c) Buyer's failure or breach of any
representation, warranty, covenant, agreement or obligation made or required to
be performed by Buyer under this Agreement or any document, certificate or
agreement delivered pursuant to this Agreement.
12.2 PROCEDURE FOR INDEMNIFICATION. Promptly after receipt by
an indemnified party under Section 12.1 of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party under such section, give notice to the
indemnifying party of the commencement thereof, but the failure so to notify the
indemnifying party shall not relieve it of any liability that it may have to any
indemnified party except to the extent the indemnifying party demonstrates that
the defense of such action is prejudiced thereby. In case any such action shall
be brought against an indemnified party and it shall promptly give notice to the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, within
ten Business Days of receipt of such notice, to assume the
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defense thereof with counsel satisfactory to such indemnified party and, after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party under such section for any fees of other counsel or any
other expenses, in each case subsequently incurred by such indemnified party in
connection with the defense thereof, other than reasonable costs of
investigation. If an indemnifying party assumes the defense of such action, (a)
no compromise or settlement thereof may be effected by the indemnifying party
without the indemnified party's consent unless (i) there is no finding or
admission of any violation of law or any violation of the rights of the
indemnified party and no effect on any other claims that may be made against the
indemnified party and (ii) the sole relief provided is monetary damages that are
paid in full by the indemnifying party and (b) the indemnifying party shall have
no liability with respect to any compromise or settlement thereof effected
without its consent (which shall not be unreasonably withheld). If notice is
given to an indemnifying party of the commencement of any action and it does
not, within ten days after the indemnified party's notice is given, give notice
to the indemnified party of its election to assume the defense thereof, the
indemnifying party shall be bound by any determination made in such action or
any compromise or settlement thereof effected by the indemnified party.
Notwithstanding the foregoing, if an indemnified party determines in good faith
that there is a reasonable probability that an action may adversely affect it or
its Affiliates other than as a result of monetary damages, such indemnified
party may, by notice to the indemnifying party, assume the exclusive right to
defend, compromise or settle such action, but the indemnifying party shall not
be bound by any determination of an action so defended or any compromise or
settlement thereof effected without its consent (which shall not be unreasonably
withheld).
12.3 INDEMNITY ESCROW. Buyer acknowledges and agrees that
recourse against the Seller's Escrow is its sole and exclusive remedy in the
event of a claim against Seller with respect to any representation or warranty
or any covenant, agreement or obligation, whether for indemnification pursuant
to Article XI or this Article XII or otherwise; provided, however, that this
limitation shall not apply to claims by Buyer for (i) breaches of covenants to
be performed or complied with by Seller after the Closing Date, (ii) breaches of
representations or warranties set forth in Sections 5.5 and 5.16 and (iii) third
party claims asserted against Buyer arising from the Excluded Liabilities for
which Buyer acknowledges and agrees that its first recourse shall be against the
Seller's Escrow, to the extent there are funds available.
ARTICLE XIII
13. MISCELLANEOUS.
13.1 PARTIES OBLIGATED AND BENEFITTED. (a) Subject to the
limitations set forth in clauses (b) and (c) below, this Agreement will be
binding upon the parties and their respective assigns and successors in interest
and will inure solely to the benefit of the parties and their respective assigns
and successors in interest, and no other Person will be entitled to any of the
benefits conferred by this Agreement.
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(b) Employer shall be deemed a third party
beneficiary of Buyer's obligations as set forth in Section 7.3(b).
(c) Without the prior written consent of the other
parties, no party will assign any of its rights under this Agreement or delegate
any of its duties under this Agreement; provided, that Buyer may assign this
Agreement to any Affiliate or subsidiary of Buyer without Seller's consent;
provided, further, that notwithstanding any such assignment Buyer shall remain
obligated to Seller pursuant to the terms and conditions of this Agreement.
13.2 PRESS RELEASES. Except as required by applicable law
based on the advice of independent counsel, neither party shall make any public
announcement, press release or Form 8-K filing under the Exchange Act with the
SEC or any other filing with any other regulatory agency with respect to the
transactions contemplated by this Agreement, without the prior written approval
of the other party.
13.3 NOTICES. All notices, consents, approvals, demands,
requests and other communications required or desired to be given hereunder must
be given in writing, shall refer to this Agreement, and shall be sent by
registered or certified mail, return receipt requested, by hand delivery, by
facsimile or by overnight courier service, addressed to the parties hereto at
their addresses set forth below, or such other addresses as they may designate
by like notice:
To Seller:
American Cable TV Investors 5, Ltd.
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Facsimile No.: (000) 000-0000
With copies to:
Xxxx, Scholer, Fierman,
Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
41
50
To Buyer at:
Xxxxxx Acquisition Partners, L.L.L.P.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxx & Xxxxxxxxx
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
Any notice from a party hereto may be given by such party's
respective attorneys. Any notice or other communications made hereunder shall be
deemed to have been given (i) if delivered personally, by overnight courier
service or by facsimile, on the date received, or (ii) if by registered or
certified mail, return receipt requested, five business days after mailing.
13.4 WAIVER. This Agreement or any of its provisions may not
be waived except in writing. The failure of any party to enforce any right
arising under this Agreement on one or more occasions will not operate as a
waiver of that or any other right on that or any other occasion.
13.5 CAPTIONS. The article and section captions of this
Agreement are for convenience only and do not constitute a part of this
Agreement.
13.6 CHOICE OF LAW. THIS AGREEMENT AND THE LEGAL RELATIONS
BETWEEN THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO THE
PERFORMED IN THAT STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
13.7 NONRECOURSE. Notwithstanding anything in this Agreement
to the contrary, subject only to the proviso of Section 12.3, no judgment shall
be sought or obtained against any of the general or limited partners of Seller
or enforced against any of such partners or any of their assets in any action
brought by reason of this Agreement or the transactions contemplated hereby.
13.8 DISPUTE RESOLUTION. Any dispute relating to this
Agreement, or the breach thereof, shall in the first instance be the subject of
a meeting between Seller and Buyer within 30 days following written notice of
the dispute. The meeting shall be attended by
42
51
individuals with decision-making authority regarding the matter in question. If
the parties cannot agree upon a resolution of the dispute within the 30-day
period referenced above, the dispute may be submitted by Seller or Buyer to
arbitration. Such arbitration shall be conducted in Denver, Colorado before a
single arbitrator appointed by the American Arbitration Association then in
effect. The award of such arbitrator shall be final and may be entered by Seller
or Buyer in any court of competent jurisdiction. The arbitration award may grant
a reimbursement to the prevailing party of all of its fees and expenses,
including reasonable attorneys' fees.
13.9 POWER OF ATTORNEY. Seller agrees that, effective as of
the Closing Date, it hereby constitutes and appoints Buyer, its successors and
assigns, the true and lawful attorney of Seller in the name of Buyer or in the
name of Seller, to endorse, collect and deposit any checks, drafts or other
instruments payable to Seller which relate to payments for goods and/or services
provided by Seller or Buyer in connection with the System.
13.10 TERMS. Terms used with initial capital letters will have
the meanings specified, applicable to both singular and plural forms, for all
purposes of this Agreement. The word "include" and derivatives of that word are
used in this Agreement in an illustrative sense rather than a limiting sense.
13.11 RIGHTS CUMULATIVE. Except as set forth in Section 10.4,
all rights and remedies of each of the parties under this Agreement will be
cumulative, and the exercise of one or more rights or remedies will not preclude
the exercise of any other right or remedy available under this Agreement or
applicable law.
13.12 FURTHER ACTIONS. Seller and Buyer will execute and
deliver to the other, from time to time at or after the Closing, for no
additional consideration and at no additional cost to the requesting party, such
further assignments, certificates, instruments, records, or other documents,
assurances or things as may be reasonably necessary to give full effect to this
Agreement and to allow each party fully to enjoy and exercise the rights
accorded and acquired by it under this Agreement.
13.13 TIME. If the last day permitted for the giving of any
notice or the performance of any act required or permitted under this Agreement
falls on a day which is not a Business Day, the time for the giving of such
notice or the performance of such act will be extended to the next succeeding
Business Day.
13.14 EXPENSES. Except as otherwise expressly provided in this
Agreement, each party will pay all of its expenses, including attorneys' and
accountants' fees, in connection with the negotiation of this Agreement, the
performance of its obligations and the consummation of the transactions
contemplated by this Agreement.
13.15 SPECIFIC PERFORMANCE. The parties agree that irreparable
damages would occur if any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached by
Seller. It is accordingly agreed that Buyer
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52
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, in addition to any
other remedy to which they are entitled at law or in equity.
13.16 SCHEDULES. Any disclosure made on a Schedule to this
Agreement will be deemed included on any other Schedule to which such disclosure
may be pertinent.
13.17 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original.
13.18 ENTIRE AGREEMENT. This Agreement (including the
Schedules and Exhibits referred to in this Agreement, which are incorporated in
and constitute a part of this Agreement) contains the entire agreement of the
parties and supersedes all prior oral or written agreements and understandings
with respect to the subject matter. This Agreement may not be amended or
modified except by a writing signed by the parties.
13.19 SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable will be ineffective to the extent of such
invalidity or unenforceability without rendering invalid or unenforceable the
remaining rights of the Person intended to be benefitted by such provision or
any other provisions of this Agreement.
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53
IN WITNESS WHEREOF the parties hereto have executed this
Agreement as of the day and year first above written.
SELLER: AMERICAN CABLE TV INVESTORS 5, LTD.
By: IR-TCI Partners V, L.P.,
its general partner
By: TCI Ventures Five, Inc.,
its general partner
By: /s/ Xxxxxx Xxxxx
------------------------------------------
Name: Xxxxxx Xxxxx
Title: President
BUYER: XXXXXX ACQUISITION PARTNERS,
L.L.L.P.
By: Xxxxxx Acquisition Management, L.P.,
its General Partner
By: RT Investments Corp., its
General Partner
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
With respect to Section 7.12(b) only:
TELE-COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
54
With respect to Section 7.12(b) only:
TCI COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Senior Vice President
55
List of Schedules and Exhibits
Pursuant to
Asset Purchase Agreement
of American Cable TV Investors 5, Ltd.
for AMERICAN CABLE TV OF SOUTHERN TENNESSEE
EXHIBITS
Exhibit A Geographic Areas of Seller's Business
Exhibit B Escrow Agreement
Exhibit C Form of Engagement Letter
Exhibit D Form of Opinion of Seller's Counsel
Exhibit E Form of Opinion of Buyer's Counsel
Exhibit F Form of Indemnity Escrow Agreement
Exhibit G Form of Opinion of Seller's FCC Counsel
Exhibit H Form of Noncompetition Agreement
SCHEDULES
Schedule 1.1 Subscriber Rates
Schedule 1.2 Consents
Schedule 1.3 Equipment
Schedule 1.4 Franchise Areas
Schedule 1.5 Governmental Permits
Schedule 1.6 Permitted Encumbrances
Schedule 1.7 Real Property
Schedule 1.8 Seller Contracts
Schedule 1.9 System
Schedule 4.2 Excluded Assets
Schedule 5.3(b) Violations of Partnership Agreement and Legal Requirements
Schedule 5.4 Complete Systems
Schedule 5.5 Encumbrances on Seller's Title
Schedule 5.7 Environmental
Schedule 5.8 Compliance with Law
Schedule 5.12 Legal Proceedings
Schedule 5.13(c) Employment Matters
Schedule 5.13(d) Employees
Schedule 5.13(e) Employer Plans
Schedule 5.14 System Information
Schedule 5.16 Taxes
Schedule 6.3(a) Consents to be Obtained or Waived by Closing Date
56
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
EXHIBIT A
GEOGRAPHIC AREAS OF SELLER'S BUSINESS
City of Shelbyville, Tennessee
Bedford County, Tennessee
Xxxx Buckle, Tennessee
Wartrace, Tennessee
City of Manchester, Tennessee
Coffee County, Tennessee
Exhibit A -- Page 1
57
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
EXHIBIT B
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of November __, 1996, by and among
American Cable TV Investors 5, Ltd., a Colorado limited partnership ("Seller")
and Xxxxxx Acquisition Partners, L.L.L.P., a Colorado limited liability limited
partnership ("Buyer"), and Xxxx, Scholer, Fierman, Xxxx & Handler, LLP, a New
York limited liability partnership, as escrow agent ("Escrow Agent").
Seller and Buyer have entered into an Asset Purchase
Agreement, dated as of November __, 1996, to sell and purchase certain cable
television assets (the "Agreement"). Pursuant to the Agreement, Xxxx, Scholer,
Fierman, Xxxx & Handler, LLP, was designated as the escrow agent thereunder.
Escrow Agent has agreed to act as an escrow agent pursuant to the terms of this
Escrow Agreement. Capitalized terms used but not defined herein shall have the
meanings set forth in the Agreement.
It is agreed as follows:
1. ESCROW FUND. Buyer has, pursuant to Section 3.1 of the
Agreement, deposited $493,750 in cash by means of wire or interbank transfer in
immediately available funds in Escrow Agent's "Xxxx, Scholer, Fierman, Xxxx &
Handler, LLP Attorney Trust Account No. 000-0000-00; Attention: Xxxxxxx Xxxxxx,"
at The Chase Manhattan Bank, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 -- ABA
No. 000000000 to be held in escrow pursuant to the terms of the Agreement (such
amount, together with any earnings thereon, being the "Escrow Fund"), to be held
and disbursed by Escrow Agent in accordance with this Escrow Agreement.
2. DISBURSEMENT.
a. NOTICES. Escrow Agent shall pay over the Escrow Fund upon
receipt of a written notice, in the form attached hereto as Exhibit I, as
follows: (a) upon receipt of such notice executed by Seller directing the Escrow
Agent to pay the Escrow Fund over to Buyer, to Buyer; (b) upon receipt of such
notice executed by Buyer directing the Escrow Agent to pay the Escrow Fund over
to Seller, to Seller; or (c) upon receipt of such notice executed by Buyer and
Seller, to the parties and in the amounts specified in the notice.
b. AGREEMENT OF SELLER AND BUYER. Seller and Buyer have agreed
that (i) the Escrow Fund shall be disbursed in accordance with the terms of this
Escrow Agreement and
Exhibit B--Page 1
58
the Agreement, (ii) at the Closing Seller and Buyer shall instruct Escrow Agent
to disburse the Escrow Fund to Seller or Seller's designee and (iii) unless the
Closing shall theretofore have taken place or unless an unresolved claim against
the Escrow Fund remains outstanding, on the date which is five Business Days
after the termination of the Agreement pursuant to Article X thereof, Seller and
Buyer shall instruct Escrow Agent to disburse the Escrow Fund to Buyer.
c. RELIANCE ON NOTICE. Upon receipt of the appropriate notice
described in Section 2.1, Escrow Agent shall pay the Escrow Fund in accordance
with Section 2.1, and Escrow Agent shall not be subject to any liability to any
party for doing so. Seller and Buyer each agrees not to assert (and shall
actively resist any attempt to assert on their behalf) any claim against Escrow
Agent for making a payment in accordance with this Section.
3. INVESTMENT OF ESCROW FUND. Escrow Agent shall invest the
Escrow Fund in (a) interest bearing accounts in, or certificates of deposit of,
The Chase Manhattan Bank or (b) (i) obligations of the United States of America,
(ii) United States government securities of agencies of the United States
government which are guaranteed by the United States government or (iii)
securities of governmental agencies, if the same are covered by a bank
repurchase agreement. Escrow Agent may invest the Escrow Fund in one or more of
the investments permitted by the preceding sentence, and may change those
investments from time to time, all as it may determine in its sole and absolute
discretion. Escrow Agent shall have no duty to maximize the return on the Escrow
Fund and shall be fully protected in making any investment or combination of
investments permitted by this Section.
4. ESCROW AGENT AS COUNSEL TO SELLER. Buyer hereby
acknowledges that it is aware that Escrow Agent is acting as counsel to Seller
in connection with the Agreement, this Escrow Agreement and other matters, and
agrees that Escrow Agent's acting under this Escrow Agreement shall not affect
its ability to act as counsel to Seller in any matter, including, but not
limited to, any claim, action or proceeding with respect to this Escrow
Agreement or the disposition of or entitlement to the Escrow Fund.
5. ESCROW AGENT.
a. GENERAL. Escrow Agent shall act as escrow agent and hold
and disburse the Escrow Fund pursuant to the terms and conditions of this Escrow
Agreement. Its duties under this Escrow Agreement shall cease upon disbursement
of the Escrow Fund.
b. LIQUIDATION OF INVESTMENTS. Unless otherwise directed by
notice executed by Seller and Buyer, all payments required by Section 2 shall be
made in cash by means of wire or interbank transfer in immediately available
funds. When necessary to provide funds in order to make any payments required by
Section 2, Escrow Agent shall liquidate any investments held by it as it may, in
its sole and absolute discretion, determine to be necessary to make such
Exhibit B--Page 2
59
payments. Escrow Agent shall have no liability for losses upon the liquidation
of any such investments.
c. LIMITED DUTIES. Escrow Agent undertakes to perform only
such duties as are expressly set forth in this Escrow Agreement. Escrow Agent
shall incur no liability whatsoever to any other party hereto, except for Escrow
Agent's own willful misconduct in its capacity as escrow agent.
d. RELIANCE ON NOTICES. Escrow Agent may rely and shall be
protected in acting or refraining from acting upon any written notice,
instruction or request furnished to it hereunder and believed by it to be
genuine and to have been signed or presented by the proper party or parties.
Escrow Agent may conclusively presume that the undersigned have full power and
authority to instruct Escrow Agent on behalf of the respective party for which
they have signed.
e. LIMITED RESPONSIBILITIES. Escrow Agent's sole
responsibility upon receipt of the notice specified in Section 2.1 requiring
payment pursuant to the terms of this Escrow Agreement is to pay the Escrow Fund
to such party as is specified in accordance with Section 2.1, and Escrow Agent
shall have no duty to determine (and shall not be affected by any knowledge
concerning) the validity, authenticity or enforceability of any specification,
certification made in or information contained in such notices.
f. ACTION IN GOOD FAITH. Escrow Agent shall not be liable for
any action taken by it in good faith and believed by it to be authorized or
within the rights or powers conferred upon it by this Escrow Agreement, and may
consult with counsel (including partners or any attorneys employed by Escrow
Agent) of its own choice and shall have full and complete authorization and
protection for any action taken or suffered by it hereunder in good faith and in
accordance with the opinion of such counsel.
g. RESIGNATION. Escrow Agent may resign and be discharged from
its duties or obligations hereunder by giving notice of such resignation to
Seller and Buyer specifying a date upon which such resignation shall take
effect, whereupon a successor escrow agent, which shall be a bank or trust
company with an office in New York City, shall be appointed by Seller. Escrow
Agent shall be entitled to pay the Escrow Fund to any successor escrow agent so
appointed. In the event no successor escrow agent has been appointed by the date
specified in the notice of resignation given by Escrow Agent, Escrow Agent shall
be entitled (but not required) to deliver the Escrow Fund to The Chase Manhattan
Bank, who shall be deemed the successor escrow agent.
h. DISPUTES. In the event of a dispute between the parties, or
if Escrow Agent shall be uncertain as to the proper disposition of the Escrow
Fund, Escrow Agent shall be entitled (but not required) to retain the Escrow
Fund pending direction as to the disposition
Exhibit B--Page 3
60
thereof by a final and unappealable order of a court of competent jurisdiction
or an award of an arbitrator or panel of arbitrators.
i. INDEMNIFICATION; ESCROW AGENT'S INTEREST IN ESCROW FUND.
(a) Seller and Buyer hereby jointly and severally agree to indemnify Escrow
Agent and all partners and employees thereof for, and to hold such persons
harmless against, any loss, liability, damage or expense incurred without bad
faith on the part of such persons arising out of or in connection with the
Escrow Agent's entering into and/or performing under this Escrow Agreement,
including, but not limited to, the cost and expense (including, but not limited
to, attorneys' fees, which may consist in whole or in part of the time charges
at their standard rates of partners of and attorneys employed by Escrow Agent)
of investigation and defending themselves against any claim or liability, and
including taxes, penalties, additions to tax or interest that are incurred by
the Escrow Agent with respect to taxes imposed on the Escrow Fund or any income
earned or derived therefrom.
(b) Seller and Buyer hereby (i) jointly and severally agree
that Escrow Agent shall be entitled to (x) withdraw from the Escrow Fund all
sums due or reasonably likely to become due to Escrow Agent on account of
Seller's and Buyer's indemnification obligations set forth above, and (y)
withhold a portion of the income earned on or derived from the Escrow Fund and
pay such withheld amount to the proper taxing authorities on behalf of the
Escrow Fund to satisfy any tax imposed on such income, and (ii) grant to Escrow
Agent a first priority lien on and security interest in and to the Escrow Fund
for the purposes of securing satisfaction by Seller and Buyer of their
indemnification obligations to Escrow Agent.
6. ESCROW AGENT NOT AFFECTED BY OTHER AGREEMENTS. This Escrow
Agreement expressly sets forth all the duties of Escrow Agent with respect to
any and all matters pertinent hereto. No implied duties or obligations shall be
read into this Escrow Agreement against Escrow Agent. Escrow Agent, in its
capacity as such, shall not be bound by the provisions of any agreement among
the parties to this Escrow Agreement and shall have no duty to inquire into, or
to take into account its knowledge of, the terms and conditions of any agreement
made or entered into in connection with this Escrow Agreement, including, but
not limited to, the Agreement.
7. AUTHORIZED SIGNATORIES. Seller hereby authorizes Xxxxxx
Xxxxx, and Buyer hereby authorizes Xxxxx Xxxxx, to receive and execute all
notices required to be given hereunder, and either party may authorize other
officers to sign on its behalf by notice to the other party.
8. NOTICES. All notices, consents, approvals, demands,
requests and other communications required or desired to be given hereunder must
be given in writing, shall refer to this Escrow Agreement, and shall be sent by
registered or certified mail, return receipt requested,
Exhibit B--Page 4
61
by hand delivery, by facsimile or by overnight courier service, addressed to the
parties hereto at their addresses set forth below, or such other addresses as
they may designate by like notice:
(a) If to Seller:
American Cable TV Investors 5, Ltd.
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxx Xxxx Xxxxxx, Esq.
Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
(b) If to Buyer:
Xxxxxx Acquisition Partners, L.L.L.P.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx & Xxxxxxxxx
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Exhibit B--Page 5
62
(c) If to Escrow Agent:
Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxx Xxxxxx, Esq. and
Xxxx Xxxxxxxx, Director of Finance
Facsimile No.: (000) 000-0000
9. MISCELLANEOUS.
a. DISPUTE RESOLUTION. Any dispute relating to this Escrow
Agreement, or the breach thereof, shall in the first instance be the subject of
a meeting between Seller and Buyer within 15 days following written notice of
the dispute. The meeting shall be attended by individuals with decision-making
authority regarding the matter in question. If the parties cannot agree upon a
resolution of the dispute within the 30-day period following receipt of notice
referenced above, the dispute may be submitted by Seller or Buyer to
arbitration. Such arbitration shall be conducted in Denver, Colorado before a
single arbitrator appointed by the American Arbitration Association then in
effect. The award of such arbitrator shall be final and may be entered by Seller
or Buyer in any court of competent jurisdiction. The arbitration award may grant
a reimbursement to the prevailing party of all of its fees and expenses,
including reasonable attorneys' fees.
c. JURISDICTION. Any action or proceeding seeking to enforce
any provision of, or based on any right arising out of, this Escrow Agreement
which is not submitted to arbitration as set forth in Section 9.1 shall be
brought against any of the parties in the courts of the State of New York in the
County of New York, or, if it has or can acquire jurisdiction, in the United
States District Court for the Southern District of New York, and each of the
parties hereby consents to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any such action or proceeding may be
served anywhere in the world, whether within or without the State of New York.
c. CAPTIONS. The captions in this Escrow Agreement are for
convenience or reference only and shall not be given any effect in the
interpretation of this Escrow Agreement.
d. NO WAIVER. The failure of a party to insist upon strict
adherence to any term of this Escrow Agreement on any occasion shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Escrow Agreement. Any
waiver must be in writing.
Exhibit B--Page 6
63
e. EXCLUSIVE AGREEMENT; AMENDMENT; ASSIGNMENT; NO THIRD PARTY
RIGHTS. This Escrow Agreement supersedes all prior agreements among the parties
with respect to its subject matter, is intended as a complete and exclusive
statement of the terms of the agreement among the parties with respect thereto,
and cannot be changed or terminated orally. No party may assign any rights or
delegate any of its duties under this Escrow Agreement, but this Escrow
Agreement shall be binding upon and inure to the benefit of the successors to
the business and assets of Seller and Buyer and to any successor escrow agent
appointed in accordance with Section 5.7. No third party shall have any rights
hereunder.
f. COUNTERPARTS. This Escrow Agreement may be executed in
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
g. GOVERNING LAW. This Escrow Agreement and all amendments
hereof and waivers and consents hereunder shall be governed by, and all disputes
arising hereunder shall be resolved in accordance with, the internal law of the
State of New York, without regard to the conflicts of law principles thereof.
h. TREATMENT OF ESCROW FUND. It is understood and agreed among
the parties hereto that Buyer will be treated as the owner of the Escrow Fund
and Escrow Agent shall report the income, if any, that is earned on, or derived
from, the Escrow Fund as income of Buyer in the taxable year or years in which
such income is properly includible.
AMERICAN CABLE TV INVESTORS 5, LTD.
By: IR-TCI Partners V, L.P.,
its general partner
By: TCI Ventures Five, Inc.,
its general partner
By:___________________________
Name:
Title:
Exhibit B--Page 7
64
XXXXXX ACQUISITION PARTNERS, L.L.L.P.
By: Xxxxxx Acquisition Management, L.P.,
its General Partner
By: RT Investment Corp., its
General Partner
By:____________________________________________
Name:
Title:
XXXX, SCHOLER, FIERMAN,
XXXX & HANDLER, LLP
as Escrow Agent
By:____________________________________________________
Name:
Partner
Exhibit B--Page 8
65
EXHIBIT I
FORM OF JOINT NOTICE
TO ESCROW AGENT
[DATE]
To: Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
as Escrow Agent ("Escrow Agent") under
the Escrow Agreement dated ________, 1996,
by and among American Cable TV Investors 5, Ltd.,
Xxxxxx Acquisition Partners, L.L.L.P. and the
Escrow Agent (the "Escrow Agreement")
Dear Sirs:
You are hereby instructed and directed to pay the Escrow Fund
(as defined in the Escrow Agreement) to the following corporation:
Payee: _______[NAME]_________
_______[ ]_________
Very truly yours,
AMERICAN CABLE TV INVESTORS 5, LTD.
By:_______________________________________
XXXXXX ACQUISITION PARTNERS, L.L.L.P.
By:_______________________________________
Exhibit B--Page 9
66
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
EXHIBIT C
FORM OF ENGAGEMENT LETTER
[ACCOUNTANT'S LETTERHEAD]
_______ __, 1997
American Cable TV Investors 5, Ltd.
c/o TCI Communications, Inc.
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Xxxxxx Acquisition Partners, L.L.L.P.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Dear _____________:
This letter is to confirm our understanding of the agreed-upon procedures to be
performed in connection with the sale of assets by American Cable TV Investors
5, Ltd. (the "SELLER") to Xxxxxx Acquisition Partners, L.L.L.P. (the "BUYER")
pursuant to the Asset Purchase Agreement dated _______ __, 1996 (the
"AGREEMENT"). Capitalized terms not otherwise defined in this Letter shall have
the meanings set forth in the Agreement.
This letter describes the objective of the review and nature of the services we
will provide. It also includes an overview of the procedures we intend to
perform, describes the type of report we intend to issue, and includes an
estimate of our fees.
Based upon our discussions with you, we believe the following proposed
procedures are those requested by you in connection with the Final Adjustments
Report, as described in Section 3.4 of the Agreement:
Exhibit C--Page 1
67
1. Obtain the Preliminary and Final Adjustments Reports, prepared by the
Partnership (the "ADJUSTMENTS") as contemplated by Sections 3.4(a) and
3.4(b) of the Agreement.
2. Obtain the appropriate Accounts Receivable aging and recalculate the
adjustment as contemplated by Section 3.3(a)(i) of the Agreement.
3. Obtain third party invoice or other appropriate documentation of
prepaid real and personal property taxes and other prepaid fees and
expenses identified by you. Recalculate the relevant adjustments, as
contemplated by Section 3.3(a)(ii) of the Agreement, based on a
proration as of the Closing Date on the basis of the period covered by
such payment.
4. Agree advance payments to, or deposits with, third parties; advance
payments to, or monies of third parties on deposit with, Seller;
accrued and unpaid real and personal property taxes; and other accrued
and unpaid expenses, as defined in Sections 3.3(a)(ii) and 3.3(b) of
the Agreement, to the appropriate account(s) per the most recent
general ledger of Seller.
We will perform the aforementioned procedure(s) and report our findings to you.
We will report to you any differences noted in performing Steps 2 through 4,
regardless of amount.
Due to the nature of the engagement our fees will be based upon time and
expenses required to complete the engagement. We estimate that our total fees
including expenses will not exceed $-----.
Because the above procedures do not constitute an audit made in accordance with
generally accepted auditing standards, we will not be expressing an opinion on
any of the accounts specified or items referred to above. Our report is intended
solely for the information and use of the managements of Seller and Buyer and
should not be used for any other purpose.
If the foregoing is in accordance with your understanding please sign the copy
of this letter in the space provided and return it to us.
Very truly yours,
ACCOUNTANT(1)
--------
1 A NATIONALLY RECOGNIZED ACCOUNTING FIRM WILL BE SELECTED BY BUYER AND
SELLER.
Exhibit C--Page 2
68
ACCEPTED BY:
---------------------- ---------------------- --------------
Seller's Signature Title Date
---------------------- ---------------------- --------------
Buyer's Signature Title Date
[PARAGRAPHS 2, 3 AND 4 ABOVE WILL ONLY BE INCLUDED IN THE ENGAGEMENT LETTER TO
THE EXTENT THAT ANY AMOUNTS ABOUT WHICH SELLER AND BUYER DISAGREE PURSUANT TO
SECTION 3.4(d) OF THE AGREEMENT FALL WITHIN THE CATEGORIES DESCRIBED IN THOSE
PARAGRAPHS. THE PARTIES ACKNOWLEDGE THAT THE PROCEDURES TO BE FOLLOWED BY THE
NATIONALLY RECOGNIZED ACCOUNTING FIRM TO BE SELECTED BY SELLER AND BUYER ("THE
ACCOUNTANT") WILL DEPEND ON WHAT THE ACCOUNTANT IS REQUESTED TO PERFORM BY
SELLER AND BUYER AND THE ACCOUNTANT'S CONCURRENCE THAT SUCH PROCEDURES CAN BE
PERFORMED BY THEM.]
Exhibit C--Page 3
69
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
EXHIBIT D
FORM OF OPINION OF SELLER'S COUNSEL
___________________, 1997
Xxxxxx Acquisition Partners, L.L.L.P.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Gentlemen:
We have acted as counsel to American Cable TV Investors 5,
Ltd., a Colorado limited partnership ("SELLER"), in connection with the sale
today by Seller of certain of Seller's assets (the "ASSETS") delineated in the
Asset Purchase Agreement dated __________, 1996 (the "AGREEMENT") between you
and Seller. This opinion is given pursuant to Section 8.8 of the Agreement.
Capitalized terms not otherwise defined herein are defined as set forth in the
Agreement.
This Opinion Letter is governed by, and shall be interpreted
in accordance with, the Legal Opinion Accord (the "ACCORD") of the ABA Section
of Business Law (1991). As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord, and this Opinion
Letter should be read in conjunction therewith. Except as herein provided, the
law covered by the opinions expressed herein is limited to the Federal Law of
the United States and the Law of the State of New York. Insofar as our opinion
pertains to matters of Colorado law, we have relied upon the opinion of Colorado
counsel, Xxxxx, Xxxxx and Xxxxx, X.X., dated _________, 1997, a copy of which is
attached hereto.
Based on the foregoing it is our opinion that:
1. Seller is a validly existing limited partnership under the
laws of the State of Colorado.
2. The Agreement is enforceable against Seller.
3. The execution and delivery of the Agreement and the Other
Agreements identified on Schedule 1 hereto by Seller and the performance by
Seller of their terms do not
Exhibit D--Page 1
70
breach or result in a violation of the Certificate of Limited Partnership or the
agreement of limited partnership of Seller.
We hereby confirm to you that, there are no actions or
proceedings against Seller, pending or overtly threatened in writing, before any
court, governmental agency or arbitrator, which (i) seek to affect the
enforceability of the Agreement or (ii) involve or affect any of the Assets or
the Business which, if adversely determined would have a material adverse effect
on the Assets or the Business.
This opinion is rendered solely for your information and
assistance in connection with the above transaction, and may not be relied upon
by any other person or for any other purpose without our prior written consent.
Very truly yours,
Exhibit D--Page 2
71
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
EXHIBIT E
FORM OF OPINION OF BUYER'S COUNSEL
________________________, 1997
American Cable TV Investors 5, Ltd.
c/o TCI Communications, Inc.
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Gentlemen:
We have acted as counsel to Xxxxxx Acquisition Partners,
L.L.L.P., a Colorado limited liability limited partnership (the "BUYER"), in
connection with the purchase today by Buyer of certain of your assets (the
"ASSETS") delineated in the Asset Purchase Agreement dated _________, 1996 (the
"AGREEMENT") between you and Buyer. This opinion is given pursuant to Section
9.6 of the Agreement. Capitalized terms not otherwise defined herein are defined
as set forth in the Agreement.
This Opinion Letter is governed by, and shall be interpreted
in accordance with, the Legal Opinion Accord (the "ACCORD") of the ABA Section
of Business Law (1991). As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord, and this Opinion
Letter should be read in conjunction therewith.
Based on the foregoing, it is our opinion that:
1. Buyer is validly existing in good standing under the laws
of the State of Colorado.
2. The Agreement is enforceable against Buyer.
3. The execution and delivery of the Agreement by Buyer and
the performance by Buyer of its terms do not breach with or result in a
violation of the Certificate of Limited Liability Limited Partnership or the
agreement of limited partnership of Buyer.
Exhibit E--Page 1
72
This opinion is rendered solely for your information and
assistance in connection with the above transaction, and may not be relied upon
by any other person or for any other purpose without our prior written consent.
Very truly yours,
Exhibit E--Page 2
73
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
EXHIBIT F
INDEMNITY ESCROW AGREEMENT
The Chase Manhattan Bank
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxxx
Re: Indemnity Escrow Agreement
Ladies and Gentlemen:
This Indemnity Escrow Agreement is hereby accepted as of
___________, 1997, by and between American Cable TV Investors 5, Ltd., a
Colorado limited partnership ("SELLER") and Xxxxxx Acquisition Partners,
L.L.L.P., a Colorado limited liability limited partnership ("BUYER"), who have
entered into an Asset Purchase Agreement, dated as of ____________, 1996, to
sell and purchase certain cable television assets (the "ASSET PURCHASE
AGREEMENT"). Capitalized terms used but not otherwise defined in this Indemnity
Escrow Agreement shall have the meanings set forth in the Asset Purchase
Agreement.
It is agreed as follows:
1. Deposit and Investments. Buyer and Seller have, pursuant to
Section 3.1 of the Asset Purchase Agreement, deposited $493,750 (such amount,
together with any earnings thereto, being the "DEPOSIT") in an account at The
Chase Manhattan Bank, as escrow agent (the "ESCROW AGENT"). The Deposit may be
invested in Investment Securities (as defined below). The Deposit shall be held
in escrow (the "ESCROW") by Escrow Agent pursuant to this Indemnity Escrow
Agreement. The Escrow Agent shall continue to invest the Deposit in Investment
Securities in accordance with the joint written instructions of Seller and Buyer
or, if no instructions are given, in interest bearing accounts at The Chase
Manhattan Bank. The term "Investment Securities" means (a) interest bearing
accounts in, or certificates of deposit of, The Chase Manhattan Bank or, (b) (i)
obligations of the United States of America, (ii) United States government
securities of agencies of the United States government which are guaranteed by
the
Exhibit F -- Page 1
74
United States government or (iii) securities of governmental agencies, if the
same are covered by a bank repurchase agreement.
2. Holdings of Deposit. The Escrow Agent shall hold and
disburse the Deposit pursuant to the terms of this Indemnity Escrow Agreement
and the Asset Purchase Agreement.
3. Disbursement of Earnings, Etc. All interest, earnings, and
gains received by the Escrow Agent from the investment of the Deposit shall be
distributed pursuant to the terms of this Indemnity Escrow Agreement. In
connection with the investment of the Deposit, Seller and Buyer shall provide
the Escrow Agent with their taxpayer identification number.
4. Disbursement Instructions.
a. Anything in this Indemnity Escrow Agreement to the contrary
notwithstanding, Escrow Agent is authorized and directed to deliver and disburse
the Deposit, or any part of the Deposit, as directed from time to time in joint
written instructions of Buyer and Seller.
b. Seller and Buyer have agreed that the Deposit will be
disbursed in accordance with the terms of this Indemnity Escrow Agreement and
the Asset Purchase Agreement.
c. Unless a claim against the Deposit, or any part of the
Deposit remains outstanding, Seller and Buyer have agreed that on the fifth
Business Day after the first anniversary of the Closing Date, Seller and Buyer
shall instruct Escrow Agent to disburse the Deposit, or any part of the Deposit
which is not subject to a claim, to Seller or Seller's designee.
5. Claims Against the Deposit by Buyer. The following
provisions shall control with respect to claims made against the Deposit by
Buyer:
a. If Buyer wishes to make a claim against the Deposit, Buyer
will send a notice of such claim to Escrow Agent and Seller. Any such notice
will state that Buyer is making a claim under Article XII of the Asset Purchase
Agreement. Any notice of a claim made shall specify the factual basis of such
claim in reasonable detail to the extent known by Buyer.
b. If Seller disputes the right of Buyer to obtain the
Deposit, or any part of the Deposit, Seller, within ten Business Days after
receipt of the notice as provided in Paragraph 4(a), shall send a notice to
Escrow Agent and Buyer stating that Seller disputes the right of Buyer to obtain
the Deposit, or any part of the Deposit, and will include in such notice a
description in reasonable detail of the basis for disputing such claim. Escrow
Agent shall continue to hold the Deposit (or the part thereof which is subject
to a dispute) until advised in writing by Seller and
Exhibit F -- Page 2
75
Buyer that such dispute has been resolved, in which case Escrow Agent shall
disburse the Deposit pursuant to said writing; provided that, if a suit, action
or arbitration proceeding (as provided for in the Asset Purchase Agreement) is
commenced for collection of the Deposit or part thereof and Escrow Agent is so
advised in writing, Escrow Agent shall, unless otherwise advised in writing by
Seller and Buyer, continue to hold the Deposit or the part thereof which is the
subject of such suit, action or arbitration proceeding until final disposition
of such suit, action or arbitration proceeding. Upon the final disposition of
such suit, action or arbitration proceeding, Escrow Agent shall disburse the
Deposit or part thereof which is subject to such suit, action or arbitration
proceeding in accordance with the determination of (i) the court in which such
suit or action was pending or (ii) the arbitrator.
c. If Seller fails to notify Escrow Agent within the period
described in Paragraph 4(b) that it contests Buyer's claim to the Deposit (or
any part thereof), Escrow Agent shall, within 5 Business Days, disburse the
Deposit (or any part thereof which is subject to a claim by Buyer that Seller
fails to timely contest) to Buyer.
6. Termination. If no claims have been made against the amount
of the Deposit remaining in the Escrow on the fifth Business Day after the first
anniversary of the Closing Date, Escrow Agent shall disburse such remaining
amount of the Deposit (together with all interest thereon) to Seller at the
address set forth below.
7. Rights, Duties, and Liabilities of Escrow Agent.
a. Escrow Agent shall have no duty to know or determine the
performance or non-performance of any provision of any agreement between the
parties to this Indemnity Escrow Agreement, including, but not limited to, the
Asset Purchase Agreement, which shall not bind Escrow Agent in any manner.
Escrow Agent assumes no responsibility for the validity or sufficiency of any
document or paper or payment deposited or called for under this Indemnity Escrow
Agreement except as may be expressly and specifically set forth in this
Indemnity Escrow Agreement, and the duties and responsibilities of Escrow Agent
under this Indemnity Escrow Agreement are limited to those expressly and
specifically stated in this Indemnity Escrow Agreement.
b. Escrow Agent shall not be personally liable for any act it
may do or omit to do under this Indemnity Escrow Agreement as such agent while
acting in good faith and in the exercise of its own best judgment, and any act
done or omitted by it pursuant to the written advice of its counsel shall be
conclusive evidence of such good faith. Escrow Agent shall have the right at any
time to consult with its counsel upon any question arising under this Indemnity
Escrow Agreement and shall incur no liability for any delay reasonably required
to obtain the advice of counsel.
Exhibit F -- Page 3
76
c. Other than those notices or demands expressly provided in
this Indemnity Escrow Agreement, Escrow Agent is expressly authorized to
disregard any and all notices or demands given by Seller or Buyer, or by any
other person, firm, or corporation, excepting only orders or process of court,
and Escrow Agent is expressly authorized to comply with and obey any and all
final process, orders, judgments, or decrees of any court, and to the extent
Escrow Agent obeys or complies with any thereof of any court, it shall not be
liable to any party to this Indemnity Escrow Agreement or to any other person,
firm, or corporation by reason of such compliance.
d. In consideration of the acceptance of this Escrow by Escrow
Agent (as evidenced by its signature below), Seller and Buyer agree, for
themselves and their successors and assigns, to pay Escrow Agent its charges,
fees, and expenses as contemplated by this Indemnity Escrow Agreement. As
between Buyer and Seller, they shall each be responsible for one-half of such
charges, fees and expenses. The escrow fees or charges, as distinguished from
other expenses under this Indemnity Escrow Agreement, shall be as written below
the Escrow Agent's signature at the time of acceptance of this Indemnity Escrow
Agreement. Such sum is intended as compensation for Escrow Agent's ordinary
services as contemplated by this Indemnity Escrow Agreement and shall be paid as
described above. In the event Escrow Agent renders services not provided for in
this Indemnity Escrow Agreement, Escrow Agent shall be entitled to receive from
Buyer and Seller reasonable compensation and reasonable costs, if any, for such
extraordinary services, and such compensation and costs shall be borne equally
by Buyer and Seller.
e. Escrow Agent shall be under no duty or obligation to
ascertain the identity, authority, or right of Seller or Buyer (or their agents)
to execute or deliver or purport to execute or deliver this Indemnity Escrow
Agreement or any documents or papers or payments deposited or called for or
given under this Indemnity Escrow Agreement.
f. Escrow Agent shall not be liable for the outlawing of any
rights under any statute of limitations or by reason of laches in respect of
this Indemnity Escrow Agreement or any documents or papers deposited with Escrow
Agent.
g. In the event of any dispute among the parties to this
Indemnity Escrow Agreement as to the facts or as to the validity or meaning of
any provision of this Indemnity Escrow Agreement, or any other fact or matter
relating to this Indemnity Escrow Agreement or to the transactions between
Seller and Buyer, Escrow Agent is instructed that it shall be under no
obligation to act, except in accordance with this Indemnity Escrow Agreement or
under process or order of court or, if there by no such process or order, until
it has filed or caused to be filed an appropriate action interpleading the
Seller and Buyer and delivering the Deposit (or the portion of the Deposit in
dispute) to such court, and Escrow Agent shall sustain no liability for its
failure to act pending such process of court or order or interpleader of action.
Exhibit F -- Page 4
77
8. Modification of Indemnity Escrow Agreement. The provisions
of this Indemnity Escrow Agreement may be supplemented, altered, amended,
modified, or revoked by writing only, signed by Buyer and Seller and approved in
writing by Escrow Agent, and upon payment of all fees, costs and expenses
incident thereto.
9. Assignment of Indemnity Escrow Agreement. No assignment,
transfer, conveyance, or hypothecation of any right, title, or interest in and
to the subject matter of this Indemnity Escrow Agreement shall be binding upon
any party, including Escrow Agent, unless all fees, costs, and expenses incident
thereto shall have been paid and then only upon the assent thereto by all
parties in writing.
10. Notice. Any notice required or desired to be given to
Buyer or Seller shall be deemed to have been given only if it is given in the
manner set forth in Section 13.3 of the Asset Purchase Agreement. Notice to
Escrow Agent may be given in the manner set forth in Section 13.3 of the Asset
Purchase Agreement to Escrow Agent's address set forth above (Facsimile No.:
(000) 000-0000) or at such other address as Escrow Agent may direct by giving
notice to Buyer and Seller.
11. Indemnity Escrow Agreement Binding. The undertakings and
agreements contained in this Indemnity Escrow Agreement shall bind and inure to
the benefit of the parties to this Indemnity Escrow Agreement and their
respective heirs, personal representatives, successors, and assigns.
Exhibit F -- Page 5
78
12. Counterparts. This Indemnity Escrow Agreement may be
executed in one or more counterparts, each of which will be deemed an original.
Whenever pursuant to this Indemnity Escrow Agreement Buyer and Seller are to
deliver a jointly signed writing to Escrow Agent or jointly advise Escrow Agent
in writing, such writing may in each and all cases be signed jointly or in
counterparts and such counterparts shall be deemed to be one instrument.
Very truly yours,
SELLER:
AMERICAN CABLE TV INVESTORS 5, LTD.
By: IR-TCI PARTNERS, V, L.P.,
its general partner
By: TCI Ventures Five, Inc., its
general partner
By:________________________
Name:
Title:
BUYER:
XXXXXX ACQUISITION PARTNERS, L.L.L.P.
By: Xxxxxx Acquisition Management, L.P.,
its General Partner
By: RT Investment Corp., its
General Partner
By:__________________________
Name:
Title:
Exhibit F -- Page 6
79
ACCEPTED this ___ day of ____________, 1997.
THE CHASE MANHATTAN BANK
By: __________________________
Name:
Title:
Fee: [$2,000] Inception Fee.
Exhibit F -- Page 7
80
ACT 5
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
EXHIBIT G
FORM FOR OPINION OF SELLER'S FCC COUNSEL
__________, 1997
Xxxxxx Acquisition Partners, L.L.L.P
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Re: American Cable TV Investors 5, Ltd.
Ladies and Gentlemen:
This letter is furnished to you pursuant to Section 8.9 of the
Asset Purchase Agreement, dated as of ____________ __, 1996 (the "Agreement"),
between American Cable TV Investors 5, Ltd., a Colorado limited partnership
("Seller") and Xxxxxx Acquisition Partners, a Colorado limited liability limited
partnership ("Buyer").
As communications counsel for Seller, we are engaged in the
representation of Seller before the Federal Communications Commission ("FCC") in
connection with its cable television business in the communities identified in
Schedule I hereto (the "System"). We have examined such records, certificates
and other documents and have considered such questions of law as relate to the
Seller and the System as we have deemed necessary or appropriate for purposes of
this opinion. This opinion is limited to the Communications Act of 1934, as
amended (the "Communications Act"), the Rules and Regulations of the FCC (the
"FCC Regulations") and Section 111 of the Copyright Act of 1976 (17 U.S.C.
Section 111) (the "Copyright Act") as applicable to the System as operated by
Seller. Except as specifically provided, we offer no opinion as to the Seller's
compliance with the Cable Television Consumer Protection and Competition Act of
1992, Pub. L. No. 102-385, 106 Stat. 1460 (1992), or those FCC regulations
promulgated pursuant to such Act.
In rendering this opinion, we have assumed the genuineness of
signatures on documents and the conformity to the original of all copies
examined by or submitted to us of photocopies or conformed copies. As to various
questions of fact in connection with this opinion, we have relied upon
examination of available files of our office, those of the FCC and
Exhibit G -- Page 1
81
the United States Copyright Office (the "Copyright Office"), and pertinent
statements and representations of officers, directors and responsible
representatives of the Seller. We have not undertaken an independent field
investigation to verify the accuracy of this information, and express no opinion
regarding technical matters or matters that would require on-scene knowledge of
the System's operations, technical or engineering matters, or local franchising
matters.
Based upon and limited by the foregoing and except as set
forth in Schedule II hereto, we are of the opinion that, as of the date set
forth above:
1. Seller holds all licenses, permits and authorizations required from
the FCC to operate the System in the manner in which we have been advised that
it is being operated, which licenses, permits and authorizations are listed in
Schedule I hereto. Each such license, permit and authorization has been issued
by the FCC, remains in full force and effect, and transfer thereof to Buyer on
the Closing Date as defined in the Agreement has been approved by the FCC, to
the extent such approval is required.
2. All materially required FCC filings required to be made by Seller in
connection with its operation of the System have been made, including, but not
limited to, Registration Statements and FCC Annual Report Forms 325, Schedule A,
to the extent such forms are required. All FCC authorizations needed to utilize
the frequencies currently used by the Systems have been obtained.
3. Basic Signal Leakage Performance Reports (FCC Annual Report Forms
320) for 1990-1996, are on file with the FCC for each community unit operated by
the System. Although those forms indicate passing test results, we render no
opinion as to the methodology or accuracy of the actual measurements taken.
4. EEO Annual Report Forms 395(A) have been filed with the FCC for each
employment unit associated with the System for calendar years 1988-1996. Except
as noted in Schedule II, the employment unit has been certified by the FCC for
calendar years 1988-1996.
5. To the best of our knowledge, Seller has provided subscriber privacy
notices to subscribers of the System on an annual basis since 1986. Seller also
provides these notices to new subscribers at the time of installation. Our
opinion is limited to the fact that such notices have been provided, and we
express no opinion as to whether the contents of such notices comply with the
requirements of the Communications Act or FCC regulations.
6. To the best of our knowledge, based on information provided by
Seller, the System is carrying all of the "must-carry" signals required to be
carried pursuant to Federal Law. To the best of our knowledge, based on
information provided by Seller, Seller has obtained all necessary retransmission
consents for the broadcast signals currently carried on the system. Except as
set
Exhibit G -- Page 2
82
forth in Schedule II hereto, to the best of our knowledge, based on information
provided by Seller, there have been no "must carry" complaints filed at the FCC
against the System.
7. Based solely upon the information provided by Seller as to antenna
structure, height, location and proximity to any aircraft landing areas, all
antenna structures that we have been advised as being utilized by Seller in
connection with its operation of the System are in compliance with the FCC's
tower registration requirements. These antenna structures are listed in Schedule
I hereto. We express no opinion as to compliance with any requirements of Part
17 of the FCC's rules (such as antenna structure, marking and lighting
requirements) other than those delineating the circumstances under which
notification to the Federal Aviation Administration and FCC is required.
8. There is no FCC judgment, decree or order which has been issued
against Seller with respect to the system, nor is there any FCC action,
proceeding or investigation pending or, to the best of our knowledge, threatened
by the FCC against Seller with respect to the System.
9. The timely filing of the periodic Statements of Account and
accompanying royalty fees qualifies the Seller for a compulsory license for the
carriage of the broadcast signals utilized by the System. Seller has filed all
required Statements of Account and supplements thereto, and, to the best of our
knowledge, has timely paid its statutory royalties for all accounting periods
beginning at least as early as the first accounting period of 1993, and all
primary transmissions listed in the latest Statements of Account qualify for a
compulsory copyright license. Although we render no opinion as to the
methodology or calculations used to determine "gross receipts" for copyright
purposes, there have been no inquiries received from the Copyright Office or any
other party which challenge or question either the computation or amount of any
royalty payments or the validity of the Statements of Account, and there is no
claim, action or demand for copyright infringement or for non-payment of
royalties, pending or, to the best of our knowledge, threatened against the
Seller.
10. Except for any necessary FCC approvals which have been obtained,
the execution, delivery and performance of this Agreement does not require the
approval of the FCC, will not result in any violation of the rules and
regulations of the FCC, and will not cause any forfeiture or impairment of any
FCC license, authorization or permit of Seller.
Exhibit G -- Page 3
83
This opinion has been prepared solely for your use in
connection with the closing of transactions under the Agreement, and may not be
relied upon by, filed with or furnished to any other person or entity without
the prior written consent of this firm.
Very truly yours,
XXXX, RAYWID & XXXXXXXXX, L.L.P.
By:_________________________
Exhibit G -- Page 4
84
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
EXHIBIT H
NONCOMPETITION AGREEMENT
NONCOMPETITION AGREEMENT dated as of _____________, 1997 (the "CLOSING
DATE") among TCI Communications, Inc., a Delaware corporation ("TCIC"),
TeleCommunications, Inc. ("TCI") and Xxxxxx Acquisition Partners, L.L.L.P., a
Colorado limited liability limited partnership ("XXXXXX").
Recitals
A. Each of TCI and TCIC is an indirect parent entity of the general
partner of American Cable TV Investors 5, Ltd. ("ACT 5").
B. ACT 5 and Xxxxxx have entered into an Asset Purchase Agreement,
dated as of __________, 1996 (the "AGREEMENT"), pursuant to which on the date
hereof ACT 5 has conveyed to Xxxxxx substantially all of the assets of ACT 5's
cable television system operating in the Franchise Areas set forth on Exhibit A
attached hereto (the "SYSTEM").
C. The Agreement provides that, as a condition to Xxxxxx'x obligation
to perform each of its obligations at Closing under the Agreement, TCI and TCIC
will execute and deliver this Noncompetition Agreement.
D. As consideration for TCI and TCIC, in addition to ACT 5 and IR-TCI
Partners V, L.P., each entering into a covenant not to compete, Xxxxxx will pay
to ACT 5 a portion of the Purchase Price equal to $_____________ [to be agreed
upon by Xxxxxx and ACT 5 prior to Closing].
E. All capitalized terms not otherwise defined herein shall have the
meanings ascribed in the Agreement.
Accordingly, the parties agree as follows:
Exhibit H -- Page 1
85
1. Acknowledgements. Each of TCI, TCIC and Xxxxxx acknowledges that the
agreements and covenants contained herein are essential to protect the Business
of ACT 5 acquired by Xxxxxx pursuant to the Agreement.
2. Covenant Not to Compete. For the period commencing on the Closing
Date and expiring on the third anniversary thereof, each of TCI and TCIC shall
not, and shall cause its Affiliates which it controls, not to, without the prior
written consent of Xxxxxx, to compete with Xxxxxx by selling or attempting to
provide any wireline cable television services, data transmission, telephone
services or security alarm monitoring (but specifically excluding video
programming provided by TCI or its Affiliates to other cable television
operators) delivered by means of terrestrial cable within a 20 mile radius of
the areas served by the System on the Closing Date. This paragraph 2 shall not
be applicable to InterMedia Partners or any Affiliate of InterMedia Partners of
which Xxx X. Hindrey, Jr. is currently, directly or indirectly, the managing
general partner.
Exhibit H -- Page 2
86
3. Scope of Noncompetition Agreement. The scope of this Noncompetition
Agreement in time, geography and types and limits of activities is reasonable
and necessary for the protection of Buyer.
4. Rights and Remedies Upon Breach; Specific Performance. Because of
the unique nature of the assets comprising the System, Xxxxxx will not have an
adequate remedy at law if TCI or TCIC breaches this Noncompetition Agreement.
Accordingly, Xxxxxx shall be entitled upon application to any court of competent
jurisdiction, to an injunction prohibiting any violation of this Noncompetition
Agreement, in addition to any other rights or remedies to which Xxxxxx may be
entitled at law or in equity. Each of TCI and TCIC hereby waives and covenants
not to assert in any action or proceeding, any claim or defense that there
exists an adequate remedy at law for breach of this Noncompetition Agreement.
5. Blue-Penciling. If this Noncompetition Agreement is found by any
court of competent jurisdiction to be too broad in extent, whether as to
activities restricted, the time period of such restrictions or geographic areas
in which such activities are restricted, this Noncompetition Agreement shall
nevertheless remain effective but shall be deemed amended to the extent
considered by such court to be reasonable, and shall be fully enforceable as so
amended.
6. Assignment; Amendment. All of the terms and provisions of this
Noncompetition Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties hereto and their respective successors and
permitted assigns. This Noncompetition Agreement shall not be assignable by TCI
or TCIC without the prior written consent of Xxxxxx. This Noncompetition
Agreement may be amended only by written agreement of the parties hereto.
Exhibit H -- Page 3
87
7. Applicable Law. The validity, performance and enforcement of this
Noncompetition Agreement shall be governed by the laws of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Noncompetition
Agreement as of the date first written above.
TELE-COMMUNICATIONS, INC.
By:__________________________
Name:
Title:
TCI COMMUNICATIONS, INC.
By:__________________________
Name:
Title:
XXXXXX ACQUISITION PARTNERS, L.L.L.P.
By:__________________________
Name:
Title:
Exhibit H -- Page 4
88
EXHIBIT A
Shelbyville System:
City of Shelbyville
Xxxx Buckle
Wartrace
Bedford County
Manchester System:
City of Manchester
Coffee County
Exhibit H -- Page 5
89
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 1.1
SUBSCRIBER RATES
SHELBYVILLE: Monthly Subscriber Rates
Effective June 30, 1996
-----------------------
Basic Subscriber Rate: $ 9.94
Expanded Basic Services Rate: 10.65(1)
-------
Total Basic and Expanded Basic: $ 20.59
MANCHESTER: Monthly Subscriber Rates
Effective June 30, 1996
-----------------------
Basic Subscriber Rate: $ 10.33
Expanded Basic Services Rate: 10.83(2)
-------
Total Basic and Expanded Basic: 21.16
--------
(1) Expanded Basic Services Rate for existing senior citizen subscribers as
of June 30, 1996 is $9.58.
(2) Expanded Basic Services Rate for existing senior citizen subscribers as
of June 30, 1996 is $9.26.
Schedule 1.1 -- Page 1
90
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 1.2
CONSENTS
1. City of Shelbyville.*
2. City of Xxxx Buckle.*
3. Town of Wartrace*
4. City of Manchester.**
5. Coffee County.**
6. Bedford County (expiring 10/7/2006)**
7. Bedford County (expiring 4/10/97)**
8. Duck River Electric Membership Corporation, pursuant to a License
Agreement for Pole Attachments, dated May 14, 1988, between Duck River
Electric Membership Corporation and American Cable TV Investors 5, Ltd.
9. Shelbyville Electric Power, Water & Sewerage System, pursuant to a Pole
Attachment Agreement, dated June 1, 1994, between Shelbyville Electric
Power, Water & Sewerage System and American Cable TV Investors 5, Ltd.
10. BellSouth Telecommunications, Inc., pursuant to a License Agreement for
Pole Attachments, dated June 1, 1993, between BellSouth
Telecommunications, Inc. and American Cable TV Investors 5, Ltd.
11. Xxxxx, Inc. d/b/a Hampton Inn, pursuant to a Bulk Cable Television
Multiple Unit Agreement, dated January 1, 1995, between Xxxxx, Inc.
d/b/a Hampton Inn and American Cable TV Investors 5, Ltd.**
12. Ambassador Motel, pursuant to a Bulk Cable Television Multiple Unit
Agreement, dated January 1, 1996, between American Cable TV Investors
5, Ltd. and Ambassador Motel.**
--------
* Required consent.
** Notice only required.
Schedule 1.2
91
13. Travelers Inn, pursuant to a Bulk Multiple Unit Service Agreement,
dated January 1, 1995, between Travelers Inn and American Cable TV
Investors 5, Ltd.**
14. Scottish Inn, pursuant to a Cable Television Multiple Unit Agreement,
dated January 1, 1995, between Scottish Inn and American Cable TV
Investors 5, Ltd.**
15. D and M Associates, Inc. d/b/a Days Inn of Manchester, pursuant to a
Bulk Cable Television Multiple-Unit Agreement, dated January 1, 1995,
between D and M Associates, Inc. d/b/a Days Inn of Manchester and
American Cable TV Investors 5, Ltd.**
16. Cumberland Inn, pursuant to a Bulk Cable Television Multiple-Unit
Agreement, dated January 1, 1995, between Cumberland Inn and American
Cable TV Investors 5, Ltd.**
17. Comfort Inn, pursuant to a Bulk Cable Television Multiple-Unit
Agreement, dated January 1, 1995, between Comfort Inn and American
Cable TV Investors 5, Ltd.**
18. R.K. Corporation, pursuant to a Bulk Cable Television Multiple-Unit
Agreement, dated January 1, 1995, between R.K. Corporation (Econolodge)
and American Cable TV Investors 5, Ltd.**
19. Lenders, pursuant to a Revolving Credit Agreement, dated June 30, 1992,
among American Cable TV Investors 5, Ltd., Various Financial
Institutions and Bank of America f/k/a Continental Bank, N.A. and
NationsBank of Texas, N.A., including all financing and security
documents relating thereto.(1)
20. Glenoak Convalescent Center, pursuant to a Bulk Cable Television
Multiple Unit Agreement, dated January 1, 1995, between American Cable
TV Investors 5, Ltd. and Glenoak Convalescent Center.**
21. Shelbyville Inn, pursuant to a Bulk Cable Television Multiple Unit
Agreement, dated January 1, 1995, between American Cable TV Investors
5, Ltd. and the Shelbyville Inn.**
22. Shelbyville Housing Authority, pursuant to a Bulk Cable Television
Multiple Unit Agreement, dated January 1, 1995, between Shelbyville
Housing Authority and American Cable TV Investors 5, Ltd.**
--------
(1) The proceeds from the sale of the System will be used to repay any
amount of the loan outstanding as of the Closing Date.
* Required consent.
** Notice only required.
Schedule 1.2
92
23. Federal Communications Commission for the transfer of licenses listed
on Schedule 1.5.*
24. TCI Cablevision Associates, Inc. f/k/a Xxxxxxx & Associates, Inc.,
pursuant to a Management Agreement, dated May 14, 1987, between TCI
Cablevision Associates, Inc. f/k/a Xxxxxxx & Associates, Inc. and
American Cable TV Investors 5, Ltd.
25. Xxxxx Xxxxxxx and Xxxxx Xxxxxxx, pursuant to a Lease Agreement, dated
January 16, 1992, between Xxxxx Xxxxxxx and Xxxxx Xxxxxxx and American
Cable TV Investors 5, Ltd.*
26. Manchester Partners, pursuant to a Lease, dated November 12, 1991,
between Manchester Partners and American Cable TV Investors 5, Ltd.
d/b/a United Artists Cable of Tennessee, as amended December 1, 1993.*
--------------
* Required consent.
** Notice only required.
Schedule 1.2
93
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 1.3
EQUIPMENT
DISTRIBUTION EQUIPMENT:
SHELBYVILLE MANCHESTER
----------- ----------
------------------------------------------------------------------------------------------------------------------------------
YEAR UPGRADED/REBUILT: 1988 1980
HOMES PASSED AT 12/31/95: 7,796 6,628
MILES OF PLANT:
Aerial 160.1 183.7
Underground 2.3 7.7
---- ----
Total 162.4 191.4
DENSITY: 48 35
CHANNELS:
CHANNEL CAPACITY: 37 38
IN USE:
Basic: 14 15
Expanded Tier: 17 17
Premium: 5 5
PPV/Other: 1 1
-- --
Total: 37 38
BANDWIDTH: 000 XXx 000 XXx
XXXXX:
Fiber: 12.8 miles 6 count 5.8 miles 6 count
Trunk: CommScope .875 and .750 CommScope .875 and .750
Feeder: CommScope .625 and .500 CommScope .625 and .500
Drops: XX-0, XX-00 XX-0
PLANT ELECTRONICS:
Amplifiers SA push/pull SA
Longest Amplifier Cascade 23 27
TAPS: Regal, Magnavox SA, Regal, Magnavox, RMS
PREMIUM SECURITY:
Addressable No No
Positive/Negative Traps Eagle Negative E, G, H, I Positive traps Channels 7, 12, R, F,
Positive 12 H
CONVERTERS:
Addressable Xxxxxxx 550 Xxxxxxx 550
Standard Regal RR-92 Regal, Xxxxxx
------------------------------------------------------------------------------------------------------------------------------
Schedule 1.3--Page 1
94
HEADEND EQUIPMENT:
SHELBYVILLE MANCHESTER
----------- ----------
------------------------------------------------------------------------------------------------------------------------------
HEADEND LOCATION: 000 Xxxxxxxx Xxxx Xxxxxx Xxxx 596 Perry Road
Wartrace, TN Manchester, TN
HEADEND SITE - OWNED/LEASED: Owned Owned
TOWER TYPE/SIZE: 180' Guyed 250' Guyed
EARTH STATIONS: 1 - SA 4.5 meter 2 - 6 meter
1 - Anixter 5.0 meter 1 - 5 meter
1 - Comtek 3.8 meter 1 - 4.5 meter
1 - 2.8 meter
RECEIVERS: 29 - SA 6600 30 - XX 0000
1 - SportCom Xxxxxxx 1815-03 1 - SportCom Controller
MODULATORS: 26 - SA 6350 23 - XX 0000
3 - Xxxxxxx Commander IV 2 - Xxxxxxx 1601
PROCESSORS: 75 - XX 0000 8 - XX 0000
STEREO ENCODERS: N/A 1 - Xxxxxxx Commander IV
SCRAMBLER/ENCODERS: 1 - Pico 5 - Eagle EE-2001
DESCRAMBLERS: 29 - Videocipher II 28 - Eagle Videocipher I
AD INSERTION EQUIPMENT: 2 - Sony 3/4 inch 2 - Channelmatic Switcher
CCV-202A
1 - Channel control unit 202 2 - Sony Player VP-7020
1 - Channelmatic Network 1 - B-Mac/Compression
Switcher DRD
2 - SA Modulator 6330
BACKUP POWER SUPPLY: 1 General propane generator General 93A04822-S
1 - AT&T Lightguide
Distribution Shelf
1 - AT&T LaserLink II
Laser
1 - Weather Star
------------------------------------------------------------------------------------------------------------------------------
Schedule 1.3--Page 2
95
VEHICLE LIST:
VEHICLE
MAKE/ IDENTIFICATION OWNED/
SYSTEM YEAR MODEL NUMBER LEASED
------ ---- ----- ------ ------
SHELBYVILLE
-----------
1993 GMC 1500 0XXXX00X0XX000000 Owned
1993 GMC 1500 0XXXX00X0XX000000 Owned
1992 GMC 3500 0XXXX00X0XX000000 Owned
1992 GMC 1500 0XXXX00X0XX000000 Owned
--------------
Total Number of 4
Vehicles
MANCHESTER
----------
1996 GMC 3500 0XXXX00X0XX000000 Owned
HDCC
bucket
truck
1995 GMC 1500 0XXXX00X0XX000000 Owned
Sierra
1994 GMC 1500 0XXXX00X0XX000000 Owned
Sierra
1993 GMC 1500 0XXXX00X0XX000000 Owned
Sierra
1992 GMC 1500 0XXXX00X0XX000000 Owned
Sierra
--------------
Total Number of 5
Vehicles
Total Number of 9
Vehicles
Schedule 1.3--Page 3
96
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV SOUTHERN TENNESSEE
SCHEDULE 1.4
FRANCHISE AREAS
SHELBYVILLE SYSTEM:
FRANCHISE AUTHORITY
City of Shelbyville
City of Xxxx Buckle
Town of Wartrace
Bedford County
MANCHESTER SYSTEM:
FRANCHISE AUTHORITY
City of Manchester
Coffee County
Schedule 1.4--Page 1
97
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 1.5
GOVERNMENTAL PERMITS
FRANCHISE AUTHORITY: EXPIRATION DATE: FRANCHISE FEE:
-------------------- ---------------- --------------
City of Shelbyville cable television 3/10/2005 5%
franchise.
City of Xxxx Buckle cable television 8/8/2000 None
franchise.
Town of Wartrace cable television 8/8/2000 None
franchise.
City of Manchester cable television 1/26/2026 3%**
franchise.
Coffee County cable television franchise.* 1/26/2026 3%**
County of Bedford cable television 10/7/2006 5%
franchise.
4/10/1997 None
County of Bedford cable television
franchise.
FCC LICENSES AND REGISTRATIONS:
Type Call Sign City, State Expiration Date
---- --------- ----------- ---------------
ES WJ78 Shelbyville, TN 8/28/2001
ES WU36 Manchester, TN 9/19/2004
IB * XXX000 Xxxxxxxxxxx, XX 9/2/97
* Consent required to transfer.
** The relevant franchise agreements allow the respective franchise authority,
with proper notice, to increase the franchise fee up to 5%.
Schedule 1.5
98
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 1.6
PERMITTED ENCUMBRANCES
None.
Schedule 1.6
99
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 1.7
REAL PROPERTY
LEASED PROPERTY:
SYSTEM LESSOR USE ADDRESS
------ ------ --- -------
Shelbyville Xxxxx Xxxxxxx and Office 000 Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxx Shelbyville
-----------------------------------------------------------------------------------------------------------------------
Manchester * Manchester Partners Office 2161 Hillsboro Blvd.
Manchester
-----------------------------------------------------------------------------------------------------------------------
OWNED PROPERTY:
SYSTEM USE/SYSTEM ADDRESS
------ ---------- -------
-----------------------------------------------------------------------------------------------------------------------
Shelbyville Headend 000 Xxxx Xxxxxx/Xxxxxxxx
Xxxx
Wartrace
-----------------------------------------------------------------------------------------------------------------------
Manchester Headend 000 Xxxxx Xxxx
Xxxxxxxxxx
-----------------------------------------------------------------------------------------------------------------------
----------
* Lease expired. Request for renewal has been made, but lessor has not
responded.
Schedule 1.7
100
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 1.8
SELLER CONTRACTS
1. License Agreement for Pole Attachments, dated May 14, 1988, between
Duck River Electric Membership Corporation and American Cable TV
Investors 5, Ltd.
2. License Agreement for Pole Attachments, dated June 1, 1993, between
BellSouth Telecommunications, Inc. and American Cable TV Investors 5,
Ltd.
3. Pole Attachment Agreement, dated June 1, 1994, between Shelbyville
Electric Power, Water & Sewerage System and American Cable TV Investors
5, Ltd.
4. Bulk Cable Television Multiple Unit Agreement, dated January 1, 1995,
between Xxxxx, Inc. d/b/a Hampton Inn and American Cable TV Investors
5, Ltd.
5. Bulk Cable Television Multiple Unit Agreement, dated January 1, 1996,
between American Cable TV Investors 5, Ltd. and Ambassador Motel.
6. Bulk Multiple Unit Service Agreement, dated January 1, 1995, between
Travelers Inn and American Cable TV Investors 5, Ltd.
7. Cable Television Multiple Unit Agreement, dated January 1, 1995,
between Scottish Inn and American Cable TV Investors 5, Ltd.
8. Bulk Cable Television Multiple-Unit Agreement, dated January 1, 1995,
between D and M Associates, Inc. d/b/a Days Inn of Manchester and
American Cable TV Investors 5, Ltd.
9. Bulk Cable Television Multiple-Unit Agreement, dated January 1, 1995,
between Cumberland Inn and American Cable TV Investors 5, Ltd.
10. Bulk Cable Television Multiple-Unit Agreement, dated January 1, 1995,
between Comfort Inn and American Cable TV Investors 5, Ltd.
11. Bulk Cable Television Multiple-Unit Agreement, dated January 1, 1995,
between R.K. Corporation (Econolodge) and American Cable TV Investors
5, Ltd.
Schedule 1.8--Page 1
101
12. Revolving Credit Agreement, dated June 30, 1992, among American Cable
TV Investors 5, Ltd., Various Financial Institutions and Bank of
America, Illinois f/k/a Continental Bank, N.A. and NationsBank of
Texas, N.A., and all financing and security arrangements relating
thereto.
13. Management Agreement, dated May 14, 1987, between TCI Cablevision
Associates, Inc. f/k/a Xxxxxxx & Associates, Inc. and American Cable TV
Investors 5, Ltd.
14. Easement and Construction Agreement, dated September 21, 1993, between
American Cable TV Investors 5, Ltd. d/b/a United Artists Cable of
Tennessee and Xxx Xxxxx.
15. Easement and Construction Agreement, dated September 1, 1993, between
American Cable TV Investors 5, Ltd. d/b/a United Artists Cable of
Tennessee and R.S. Pollaek.
16. Letter Agreement Authorizing Right-of-Way, dated August 6, 1993,
between American Cable TV Investors 5, Ltd. d/b/a United Artists Cable
of Tennessee and Xxxxxx Xxxxxx.
17. Easement and Construction Agreement, dated September 1, 1993, between
American Cable TV Investors 5, Ltd. d/b/a United Artists Cable of
Tennessee and Xxxxx Xxxx.
18. Easement and Construction Agreement, dated September 24, 1993, between
American Cable TV Investors 5, Ltd. d/b/a United Artists Cable of
Tennessee and Xxxxxxx X. Xxxx.
19. Lease Agreement, dated January 16, 1992, between Xxxxx Xxxxxxx and
Xxxxx Xxxxxxx and American Cable TV Investors 5, Ltd.
20. Lease Renewal, dated November 27, 1993, between American Cable TV
Investors 5, Ltd. d/b/a United Artists Cable of Tennessee, and
Brandywine Real Estate Management Services Corporation.
21. Lease Renewal, dated November 27, 1993, between American Cable TV
Investors 5, Ltd. d/b/a United Artists Cable of Tennessee and Parkmoore
Management Corporation.
22. Lease, dated November 12, 1991, between Manchester Partners and
American Cable TV Investors 5, Ltd. d/b/a United Artists Cable of
Tennessee, as amended December 1, 1993.
23. Warranty Deed, dated April 21, 1993, between Xxxxx Xxxxxxxxx and
American Cable TV Investors 5, Ltd.
24. Cable Television Easement and Maintenance Agreement, dated September
15, 1993, between The Xxxx School and American Cable TV Investors 5,
Ltd, as amended on September 26, 1995.
Schedule 1.8--Page 2
102
25. Bulk Multiple Unit Service Agreement, dated January 1, 1995, between
American Cable TV Investors 5, Ltd. and Blue Ribbon Inn, as amended on
March 20, 1996.
26. Bulk Multiple Unit Service Agreement, dated January 1, 1995, between
Budget Motel and American Cable TV Investors 5, Ltd.
27. Bulk Multiple Unit Service Agreement, dated January 1, 1995, between
American Cable TV Investors 5, Ltd. and Suburban Motel.
28. Bulk Multiple Unit Service Agreement, dated January 1, 1995, between
American Cable TV Investors 5, Ltd. and the Magnolia Motel, as amended
on February 1, 1995.
29. Bulk Cable Television Multiple Unit Agreement, dated January 1, 1995,
between American Cable TV Investors 5, Ltd. and Glenoak Convalescent
Center.
30. Bulk Cable Television Multiple Unit Agreement, dated January 1, 1995,
between Shelbyville Housing Authority and American Cable TV Investors
5, Ltd.
31. Amendment to Bulk Cable Television Agreement, dated January 1, 1995,
between American Cable TV Investors 5, Ltd. and Xxxxxxx Corporation.
32. Bulk Multiple Unit Service Agreement, dated January 1, 1995, between
American Cable TV Investors 5, Ltd. and Xxxxxxxx Motel.
33. Bulk Cable Television Multiple Unit Agreement, dated January 1, 1995,
between American Cable TV Investors 5, Ltd. and the Shelbyville Inn.
34. Bulk Multiple Unit Service Agreement, dated January 1, 1995, between
American Cable TV Investors 5, Ltd. and X.X. Xxxxxxxxxx.
35. Bulk Multiple Unit Service Agreement, dated February 24, 1995, between
American Cable TV Investors 5, Ltd. and Xxxx Xxxxx (Oakwood Park).
36. Bulk Multiple Unit Service Agreement, dated March 3, 1995, between
American Cable TV Investors 5, Ltd. and Idrihd Vohre (Bedford Motor
Court).
37. Cable Television Bulk Billing Agreement, dated October 25, 1991,
between Bedford County General Hospital and American Cable TV Investors
5, Ltd, as amended on March 14, 1996.
38. Bulk Multiple Unit Service Agreement, dated January 1, 1995, between
American Cable TV Investors 5, Ltd. and Trucker's Inn.
Schedule 1.8--Page 3
103
39. Bulk Multiple Unit Service Agreement, dated January 1, 1995, between
American Cable TV Investors 5, Ltd. and Best Western/Old Fort Motor
Inn.
40. Bulk Multiple Unit Service Agreement, dated January 1, 1995, between
American Cable TV Investors 5, Ltd. and Professional Manor.
41. Bulk Multiple Unit Service Agreement, dated January 1, 1995, between
American Cable TV Investors 5, Ltd. and Coffee County Medical Center.
42. Bulk Multiple Unit Service Agreement, dated January 1, 1995, between
American Cable TV Investors 5, Ltd. and Park Motel.
43. Retransmission Consent Agreement, dated September 17, 1993, between
WSMV and American Cable TV Investors 5, Ltd. d/b/a United Artists Cable
of Tennessee.
44. Retransmission Consent Agreement, dated September 2, 1993, between WTVF
and American Cable TV Investors 5, Ltd. d/b/a United Artists Cable of
Tennessee.
Schedule 1.8--Page 4
104
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 1.9
SYSTEM
American Cable TV of Southern Tennessee comprising the System
included in the Franchise Areas set forth in Schedule 1.4.
Schedule 1.9
105
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 4.2
EXCLUDED ASSETS
Revolving Credit Agreement, dated June 30, 1992, among
American Cable TV Investors 5, Ltd., Various Financial Institutions and Bank of
America, Illinois f/k/a Continental Bank, N.A. and NationsBank of Texas, N.A.,
and all financing and security documents relating thereto.
Schedule 4.2
106
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 5.3(b)
VIOLATIONS OF PARTNERSHIP AGREEMENT AND LEGAL REQUIREMENTS
If consents to transfer the franchises and FCC licenses listed
on Schedule 1.5 are not obtained or notice is not given as required by the terms
of the underlying documents, Seller may be deemed to have violated a Legal
Requirement.
If consents to the assignment of the following agreements are
not obtained or notices are not given as required by the terms of the
agreements, such agreements may be terminated:
1. License Agreement for Pole Attachments, dated May 14, 1988, between
Duck River Electric Membership Corporation and American Cable TV
Investors 5, Ltd.
2. License Agreement for Pole Attachments, dated June 1, 1994, between
Shelbyville Electric Power, Water & Sewerage System and American Cable
TV Investors 5, Ltd.
3. License Agreement for Pole Attachments, dated June 1, 1993, between
BellSouth Telecommunications, Inc. and American Cable TV Investors 5,
Ltd.
4. Management Agreement, dated May 14, 1987, between TCI Cablevision
Associates, Inc. f/k/a Xxxxxxx & Associates, Inc. and American Cable TV
Investors 5, Ltd.
5. Bulk Cable Television Multiple Unit Agreement, dated January 1, 1995,
between Xxxxx, Inc. d/b/a Hampton Inn and American Cable TV Investors
5, Ltd.
6. Bulk Cable Television Multiple Unit Agreement, dated January 1, 1996,
between Ambassador Motel and American Cable TV Investors 5, Ltd.
7. Bulk Multiple Unit Service Agreement, dated January 1, 1995, between
Travelers Inn and American Cable TV Investors 5, Ltd.
8. Cable Television Multiple Unit Agreement, dated January 1, 1995,
between Scottish Inn and American Cable TV Investors 5, Ltd.
9. Bulk Cable Television Multiple Unit Agreement, dated January 1, 1995,
between D and M Associates d/b/a Days Inn of Manchester and American
Cable TV Investors 5, Ltd.
Schedule 5.3(b)--Page 1
107
10. Bulk Cable Television Multiple Unit Agreement, dated January 1, 1995,
between Cumberland Inn and American Cable TV Investors 5, Ltd.
11. Bulk Cable Television Multiple Unit Agreement, dated January 1, 1995,
between Comfort Inn and American Cable TV Investors 5, Ltd.
12. Bulk Cable Television Multiple Unit Agreement, dated January 1, 1995,
between R.K. Corporation (Econolodge) and American Cable TV Investors
5, Ltd.
13. Revolving Credit Agreement, dated June 30, 1992, among American Cable
TV Investors 5, Ltd., various financial institutions and Bank of
America f/k/a/ Continental Bank, N.A. and NationsBank of Texas, N.A.,
including all financing and security documents relating thereto.(1)
14. Bulk Cable Television Multiple Unit Agreement, dated January 1, 1995,
between Glenoak Convalescent Center and American Cable TV Investors 5,
Ltd.
15. Bulk Cable Television Multiple Unit Agreement, dated January 1, 1995,
between the Shelbyville Inn and American Cable TV Investors 5, Ltd.
16. Bulk Cable Television Multiple Unit Agreement, dated January 1, 1995,
between Shelbyville Housing Authority and American Cable TV Investors
5, Ltd.
17. The agreements marked with an asterisk on Schedule 1.2 represent
Required Consents.
18. Lease Agreement, dated January 16, 1992, between Xxxxx Xxxxxxx and
Xxxxx Xxxxxxx and American Cable TV Investors 5, Ltd.
19. Lease, dated November 12, 1991, between Manchester Partners and
American Cable TV Investors 5, Ltd. d/b/a United Artists Cable of
Tennessee, as amended December 1, 1993.
--------
(1) The proceeds from the sale of the System will be used to repay
any amount of the loan outstanding as of the Closing Date.
Schedule 5.3(b)--Page 2
108
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 5.4
COMPLETE SYSTEMS
None.
Schedule 5.4
109
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 5.5
ENCUMBRANCES ON SELLER'S TITLE
Assets of American Cable TV Investors 5, Ltd. have been
pledged as collateral under the Revolving Credit Agreement, dated as of June 30,
1992, among American Cable TV Investors 5, Ltd., Various Financial Institutions
and Bank of America, Illinois f/k/a Continental Bank, N.A. and NationsBank of
Texas, N.A. (including all financing and security documents relating thereto).
All encumbrances related to the foregoing shall be satisfied and removed at or
prior to Closing by Seller and the Lenders thereto.
Schedule 5.5
110
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 5.7
ENVIRONMENTAL
None.
Schedule 5.7
111
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 5.8
COMPLIANCE WITH LAW
As of the date of this Agreement, Seller may not have paid the
5% franchise fee in connection with the County of Bedford cable television
franchise.
Schedule 5.8
112
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 5.12
LEGAL PROCEEDINGS
None.
Schedule 5.12
113
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 5.13(c)
EMPLOYMENT MATTERS
None.
Schedule 5.13(c)
114
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 5.13(d)
EMPLOYEES
SYSTEM NAME SALARY/WAGES
OFFICE/ADMINISTRATION
Shelbyville Xxxxx Xxxxx $32,175/year
Shelbyville Xxxxx Xxxxxxx $10.50/hour
Shelbyville Xxxxxxx Xxxxx $8.80/hour
Shelbyville Xxxx XxXxxxxxxx $7.50/hour
Manchester Xxxxxxx Xxxxxxx $32,175/year
Manchester Xxxxxxxx Xxxx $6.75/hour
Manchester Xxxxx Xxxxxxx $7.50/hour
Manchester Xxx Xxxxxx $9.10/hour
TECHNICAL
Shelbyville Xxxxx Xxxxxxx $15.50/hour
Shelbyville Xxxx Xxxxx $8.75/hour
Shelbyville Xxxxx Xxxxx $10.66/hour
Shelbyville Xxxx Xxxxxx* $7.50/hour
Manchester Xxxxx Xxxxxxx* $7.00/hour
Manchester Xxxxx Xxxxxxx $12.00/hour
Manchester Xxxxxxx Xxxxx $11.50/hour
Manchester Xxxxxxx Frame $7.75/hour
* Not employed as of June 30, 1996. Xxxxx Xxxxx was employeed during such
period, and earned $11.00/hour until his employment terminated in
August of 1996.
Schedule 5.3(d)
115
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 5.13(e)
EMPLOYER PLANS
CIGNA Health Maintenance Organization.
CIGNA Preferred Provider Organization Plan.
1995 TCI Benefits Plan.
Schedule 5.3(e)
116
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 5.14
SYSTEM INFORMATION
AS OF JUNE 30, 1996
Number of Equivalent Basic Subscribers: 11,471
Number of Subscribers of Expanded
Basic Services: 10,555
Bandwidth: 300 MHz
Homes Passed by the System: 14,504
Number of Miles of Plant: 361.02
Channel Lineup:
SHELBYVILLE: MANCHESTER:
BUDGET CABLE: BUDGET CABLE:
2 WKRN ABC Nashville 2 WKRN ABC Nashville
3 WZTV FOX Nashville 3 WZTV FOX Xxxxxxxxx
0 XXXX XXX Xxxxxxxxx 0 XXXX XXX Nashville
5 WTVF CBS Nashville 5 WTVF CBS Nashville
6 QVC 6 LOCAL
7 LOCAL 7 SHOWTIME*
Schedule 5.14 -- Page 1
117
8 WDCN PBS Nashville 8 WDCN PBS Nashville
9 C-Span 9 C-Span
10 The Family Channel 10 WHTN
11 The Weather Channel 11 The Weather Channel
12 ENCORE* 12 ENCORE*
13 CMT 13 CMT
14 WHTN 14 The Family Channel
SHELBYVILLE: MANCHESTER:
15 Arts & Entertainment 15 DISNEY*
16 WXMT - Channel 30 Nashville 16 WXMT
17 Arts & Entertainment
18 QVC
19 HBO*
20 Nickelodeon
PLUS SERVICE: PLUS SERVICE:
17 USA 21 CINEMAX*
18 CINEMAX* 22 American
Movie Classics
20 HBO* 23 CNN Cable
News Network
21 SHOWTIME* 24 MTV
Schedule 5.14
118
22 DISNEY* 25 TBS Atlanta
Superstation
23 CNN Cable 26 WGN Chicago
News Network Superstation
24 TBS Atlanta 27 ESPN
Superstation
25 Discovery 28 Discovery
26 VH-1 29 TNN The
Nashville
Network
27 WGN Chicago 30 CNBC
Superstation
28 TNT Xxxxxx 31 VH-1/Comedy
Network Central
Television
29 American 32 The Nostalgia
Movie Classics Channel
30 TNN The 33 Headline News
Nashville
Network
31 MTV 34 Sportsouth
32 CNBC 35 USA
SHELBYVILLE: MANCHESTER:
33 Nickelodeon 36 TNT Xxxxxx
Network
Television
34 Headline News 37 Lifetime
35 Sportsouth 38 BET Black
Entertainment
Television
Schedule 5.14
000
00 XXXX 00 Pay Per View*
37 Lifetime
38 BET Black
Entertainment
Television
40 Pay Per View*
--------------
* Available for an additional monthly fee.
Schedule 5.14
120
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 5.16
TAXES
All Tax Returns required to be filed for the year ended
December 31, 1996 and Taxes due or payable on such Tax Returns are anticipated
to be filed and paid by Seller no later than June 30, 1997.
Schedule 5.16
121
AMERICAN CABLE TV INVESTORS 5, LTD.
AMERICAN CABLE TV OF SOUTHERN TENNESSEE
SCHEDULE 6.3(a)
CONSENTS TO BE OBTAINED OR WAIVED BY CLOSING DATE
None.
Schedule 6.3(a)
122
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of November 29, 1996, by and among
American Cable TV Investors 5, Ltd., a Colorado limited partnership ("Seller")
and Xxxxxx Acquisition Partners, L.L.L.P., a Colorado limited liability limited
partnership ("Buyer"), and Xxxx, Scholer, Fierman, Xxxx & Handler, LLP, a New
York limited liability partnership, as escrow agent ("Escrow Agent").
Seller and Buyer have entered into an Asset Purchase
Agreement, dated as of November 29, 1996, to sell and purchase certain cable
television assets (the "Agreement"). Pursuant to the Agreement, Xxxx, Scholer,
Fierman, Xxxx & Handler, LLP, was designated as the escrow agent thereunder.
Escrow Agent has agreed to act as an escrow agent pursuant to the terms of this
Escrow Agreement. Capitalized terms used but not defined herein shall have the
meanings set forth in the Agreement.
It is agreed as follows:
1 ESCROW FUND. Buyer has, pursuant to Section 3.1 of the Agreement,
deposited $493,750 in cash by means of wire or interbank transfer in
immediately available funds in Escrow Agent's "Xxxx, Scholer, Fierman,
Xxxx & Handler, LLP Attorney Trust Account No. 000-0000-00; Attention:
Xxxxxxx Xxxxxx," at The Chase Manhattan Bank, 00 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 -- ABA No. 000000000 to be held in escrow pursuant
to the terms of the Agreement (such amount, together with any earnings
thereon, being the "Escrow Fund"), to be held and disbursed by Escrow
Agent in accordance with this Escrow Agreement.
2 DISBURSEMENT.
2.1 NOTICES. Escrow Agent shall pay over the Escrow Fund upon
receipt of a written notice, in the form attached hereto as Exhibit I, as
follows: (a) upon receipt of such notice executed by Seller directing the Escrow
Agent to pay the Escrow Fund over to Buyer, to Buyer; (b) upon receipt of such
notice executed by Buyer directing the Escrow Agent to pay the Escrow Fund over
to Seller, to Seller; or (c) upon receipt of such notice executed by Buyer and
Seller, to the parties and in the amounts specified in the notice.
2.2 AGREEMENT OF SELLER AND BUYER. Seller and Buyer have
agreed that (i) the Escrow Fund shall be disbursed in accordance with the terms
of this Escrow Agreement and the Agreement, (ii) at the Closing Seller and Buyer
shall instruct Escrow Agent to disburse the Escrow Fund to Seller or Seller's
designee and (iii) unless the Closing shall theretofore have taken place or
unless an unresolved claim against the Escrow Fund remains outstanding, on the
date which is five Business Days after the termination of the Agreement pursuant
to Article X thereof, Seller and Buyer shall instruct Escrow Agent to disburse
the Escrow Fund to Buyer.
2.3 RELIANCE ON NOTICE. Upon receipt of the appropriate notice
described in Section 2.1, Escrow Agent shall pay the Escrow Fund in accordance
with Section 2.1, and Escrow Agent shall not be subject to any liability to any
party for doing so. Seller and Buyer each agrees not to assert (and shall
actively resist any attempt to assert on their behalf) any claim against Escrow
Agent for making a payment in accordance with this Section .
3 INVESTMENT OF ESCROW FUND. Escrow Agent shall invest the Escrow Fund in
(a) interest bearing accounts in, or certificates of deposit of, The
Chase Manhattan Bank or (b) (i) obligations of the United States of
America, (ii) United States government securities of agencies of the
United States government which are guaranteed by the United States
government or (iii) securities of governmental agencies, if the same
are covered by a bank repurchase agreement. Escrow Agent may invest the
Escrow Fund in one or more of the investments permitted by the
preceding sentence, and may change those investments from time to time,
all as it may determine in its sole and absolute discretion. Escrow
Agent shall have no duty to maximize the return on the Escrow Fund and
shall be fully protected in making any investment or combination of
investments permitted by this Section .
123
4 ESCROW AGENT AS COUNSEL TO SELLER. Buyer hereby acknowledges that it is
aware that Escrow Agent is acting as counsel to Seller in connection
with the Agreement, this Escrow Agreement and other matters, and agrees
that Escrow Agent's acting under this Escrow Agreement shall not affect
its ability to act as counsel to Seller in any matter, including, but
not limited to, any claim, action or proceeding with respect to this
Escrow Agreement or the disposition of or entitlement to the Escrow
Fund.
5 ESCROW AGENT.
5.1 GENERAL. Escrow Agent shall act as escrow agent and hold
and disburse the Escrow Fund pursuant to the terms and conditions of this Escrow
Agreement. Its duties under this Escrow Agreement shall cease upon disbursement
of the Escrow Fund.
5.2 LIQUIDATION OF INVESTMENTS. Unless otherwise directed by
notice executed by Seller and Buyer, all payments required by Section 2 shall be
made in cash by means of wire or interbank transfer in immediately available
funds. When necessary to provide funds in order to make any payments required by
Section 2, Escrow Agent shall liquidate any investments held by it as it may, in
its sole and absolute discretion, determine to be necessary to make such
payments. Escrow Agent shall have no liability for losses upon the liquidation
of any such investments.
5.3 LIMITED DUTIES. Escrow Agent undertakes to perform only
such duties as are expressly set forth in this Escrow Agreement. Escrow Agent
shall incur no liability whatsoever to any other party hereto, except for Escrow
Agent's own willful misconduct in its capacity as escrow agent.
5.4 RELIANCE ON NOTICES. Escrow Agent may rely and shall be
protected in acting or refraining from acting upon any written notice,
instruction or request furnished to it hereunder and believed by it to be
genuine and to have been signed or presented by the proper party or parties.
Escrow Agent may conclusively presume that the undersigned have full power and
authority to instruct Escrow Agent on behalf of the respective party for which
they have signed.
5.5 LIMITED RESPONSIBILITIES. Escrow Agent's sole
responsibility upon receipt of the notice specified in Section 2.1 requiring
payment pursuant to the terms of this Escrow Agreement is to pay the Escrow Fund
to such party as is specified in accordance with Section 2.1, and Escrow Agent
shall have no duty to determine (and shall not be affected by any knowledge
concerning) the validity, authenticity or enforceability of any specification,
certification made in or information contained in such notices.
5.6 ACTION IN GOOD FAITH. Escrow Agent shall not be liable for
any action taken by it in good faith and believed by it to be authorized or
within the rights or powers conferred upon it by this Escrow Agreement, and may
consult with counsel (including partners or any attorneys employed by Escrow
Agent) of its own choice and shall have full and complete authorization and
protection for any action taken or suffered by it hereunder in good faith and in
accordance with the opinion of such counsel.
5.7 RESIGNATION. Escrow Agent may resign and be discharged
from its duties or obligations hereunder by giving notice of such resignation to
Seller and Buyer specifying a date upon which such resignation shall take
effect, whereupon a successor escrow agent, which shall be a bank or trust
company with an office in New York City, shall be appointed by Seller. Escrow
Agent shall be entitled to pay the Escrow Fund to any successor escrow agent so
appointed. In the event no successor escrow agent has been appointed by the date
specified in the notice of resignation given by Escrow Agent, Escrow Agent shall
be entitled (but not required) to deliver the Escrow Fund to The Chase Manhattan
Bank, who shall be deemed the successor escrow agent.
5.8 DISPUTES. In the event of a dispute between the parties,
or if Escrow Agent shall be uncertain as to the proper disposition of the Escrow
Fund, Escrow Agent shall be entitled (but not required) to
2
124
retain the Escrow Fund pending direction as to the disposition thereof by a
final and unappealable order of a court of competent jurisdiction or an award of
an arbitrator as set forth in Section 9.1 hereof.
5.9 INDEMNIFICATION; ESCROW AGENT'S INTEREST IN ESCROW FUND.
(a) Seller and Buyer hereby jointly and severally agree to indemnify Escrow
Agent and all partners and employees thereof for, and to hold such persons
harmless against, any loss, liability, damage or expense incurred without bad
faith on the part of such persons arising out of or in connection with the
Escrow Agent's entering into and/or performing under this Escrow Agreement,
including, but not limited to, the cost and expense (including, but not limited
to, attorneys' fees, which may consist in whole or in part of the time charges
at their standard rates of partners of and attorneys employed by Escrow Agent)
of investigation and defending themselves against any claim or liability, and
including taxes, penalties, additions to tax or interest that are incurred by
the Escrow Agent with respect to taxes imposed on the Escrow Fund or any income
earned or derived therefrom.
(b) Seller and Buyer hereby (i) jointly and severally agree
that Escrow Agent shall be entitled to (x) withdraw from the Escrow Fund all
sums due or reasonably likely to become due to Escrow Agent on account of
Seller's and Buyer's indemnification obligations set forth above, and (y)
withhold a portion of the income earned on or derived from the Escrow Fund and
pay such withheld amount to the proper taxing authorities on behalf of the
Escrow Fund to satisfy any tax imposed on such income, and (ii) grant to Escrow
Agent a first priority lien on and security interest in and to the Escrow Fund
for the purposes of securing satisfaction by Seller and Buyer of their
indemnification obligations to Escrow Agent.
6 ESCROW AGENT NOT AFFECTED BY OTHER AGREEMENTS. This Escrow Agreement
expressly sets forth all the duties of Escrow Agent with respect to any
and all matters pertinent hereto. No implied duties or obligations
shall be read into this Escrow Agreement against Escrow Agent. Escrow
Agent, in its capacity as such, shall not be bound by the provisions of
any agreement among the parties to this Escrow Agreement and shall have
no duty to inquire into, or to take into account its knowledge of, the
terms and conditions of any agreement made or entered into in
connection with this Escrow Agreement, including, but not limited to,
the Agreement.
7 AUTHORIZED SIGNATORIES. Seller hereby authorizes Xxxxxx Xxxxx, and
Buyer hereby authorizes Xxxxx Xxxxx, to receive and execute all notices
required to be given hereunder, and either party may authorize other
officers to sign on its behalf by notice to the other party.
8 NOTICES. All notices, consents, approvals, demands, requests and other
communications required or desired to be given hereunder must be given
in writing, shall refer to this Escrow Agreement, and shall be sent by
registered or certified mail, return receipt requested, by hand
delivery, by facsimile or by overnight courier service, addressed to
the parties hereto at their addresses set forth below, or such other
addresses as they may designate by like notice:
(a) If to Seller:
American Cable TV Investors 5, Ltd.
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxx Xxxx Xxxxxx, Esq.
Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
3
125
Facsimile No.: (000) 000-0000
(b) If to Buyer:
Xxxxxx Acquisition Partners, L.L.L.P.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx & Xxxxxxxxx
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
(c) If to Escrow Agent:
Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:Xxxx Xxxx Xxxxxx, Esq. and
Xxxx Xxxxxxxx, Director of Finance
Facsimile No.: (000) 000-0000
9 MISCELLANEOUS.
9.1 DISPUTE RESOLUTION. Any dispute relating to this Escrow
Agreement, or the breach thereof, shall in the first instance be the subject of
a meeting between Seller and Buyer within 15 days following written notice of
the dispute. The meeting shall be attended by individuals with decision-making
authority regarding the matter in question. If the parties cannot agree upon a
resolution of the dispute within the 30-day period following receipt of notice
referenced above, the dispute may be submitted by Seller or Buyer to
arbitration. Such arbitration shall be conducted in Denver, Colorado before a
single arbitrator appointed by the American Arbitration Association then in
effect. The award of such arbitrator shall be final and may be entered by Seller
or Buyer in any court of competent jurisdiction. The arbitration award may grant
a reimbursement to the prevailing party of all of its fees and expenses,
including reasonable attorneys' fees.
9.2 JURISDICTION. Any action or proceeding seeking to enforce
any provision of, or based on any right arising out of, this Escrow Agreement
which is not submitted to arbitration as set forth in Section 9.1 shall be
brought against any of the parties in the courts of the State of New York in the
County of New York, or, if it has or can acquire jurisdiction, in the United
States District Court for the Southern District of New York, and each of the
parties hereby consents to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any such action or proceeding may be
served anywhere in the world, whether within or without the State of New York.
9.3 CAPTIONS. The captions in this Escrow Agreement are for
convenience or reference only and shall not be given any effect in the
interpretation of this Escrow Agreement.
9.4 NO WAIVER. The failure of a party to insist upon strict
adherence to any term of this Escrow Agreement on any occasion shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Escrow Agreement. Any
waiver must be in writing.
4
126
9.5 EXCLUSIVE AGREEMENT; AMENDMENT; ASSIGNMENT; NO THIRD PARTY
RIGHTS. This Escrow Agreement supersedes all prior agreements among the parties
with respect to its subject matter, is intended as a complete and exclusive
statement of the terms of the agreement among the parties with respect thereto,
and cannot be changed or terminated orally. No party may assign any rights or
delegate any of its duties under this Escrow Agreement, but this Escrow
Agreement shall be binding upon and inure to the benefit of the successors to
the business and assets of Seller and Buyer and to any successor escrow agent
appointed in accordance with Section 5.7. No third party shall have any rights
hereunder.
9.6 COUNTERPARTS. This Escrow Agreement may be executed in
counterparts, each of which shall be considered an original, but all of which
together shall constitute the same instrument.
9.7 GOVERNING LAW. This Escrow Agreement and all amendments
hereof and waivers and consents hereunder shall be governed by, and all disputes
arising hereunder shall be resolved in accordance with, the internal law of the
State of New York, without regard to the conflicts of law principles thereof.
5
127
9.8 TREATMENT OF ESCROW FUND. It is understood and agreed
among the parties hereto that Buyer will be treated as the owner of the Escrow
Fund and Escrow Agent shall report the income, if any, that is earned on, or
derived from, the Escrow Fund as income of Buyer in the taxable year or years in
which such income is properly includible.
AMERICAN CABLE TV INVESTORS 5, LTD.
By: IR-TCI Partners V, L.P.,
its general partner
By: TCI Ventures Five, Inc.,
its general partner
By: /s/ Xxxxxx Xxxxx
--------------------------
Name: Xxxxxx Xxxxx
Title: President
XXXXXX ACQUISITION PARTNERS, L.L.L.P.
By: Xxxxxx Acquisition Management, L.P.,
its General Partner
By: RT Investment Corp., its
General Partner
By: /s/ Xxxxx X. Xxxxx
--------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
XXXX, SCHOLER, FIERMAN,
XXXX & HANDLER, LLP
as Escrow Agent
By: /s/ Xxxx Xxxx Xxxxxx
---------------------------
Name: Xxxx Xxxx Xxxxxx
Partner
128
EXHIBIT I
FORM OF JOINT NOTICE
TO ESCROW AGENT
[DATE]
To: Xxxx, Scholer, Fierman, Xxxx & Handler, LLP
as Escrow Agent ("Escrow Agent") under
the Escrow Agreement dated ________, 1996,
by and among American Cable TV Investors 5, Ltd.,
Xxxxxx Acquisition Partners, L.L.L.P. and the
Escrow Agent (the "Escrow Agreement")
Dear Sirs:
You are hereby instructed and directed to pay the Escrow Fund
(as defined in the Escrow Agreement) to the following corporation:
Payee: _______[NAME]_________
_____[_______]________
Very truly yours,
AMERICAN CABLE TV INVESTORS 5, LTD.
By:_______________________________________
XXXXXX ACQUISITION PARTNERS, L.L.L.P.
By:_______________________________________
